Not upheld: unfair credit relationship under Section 140A CCA; misrepresentation under Section 75 CCA; undisclosed commission; alleged breach of Timeshare Regulations 2010 Regulation 14(3) complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs K purchased a Fractional Club timeshare membership in January 2014 for £6,392 financed by Shawbrook Bank Limited. They complained in August 2019 that the supplier misrepresented the product as an investment in breach of Timeshare Regulations, that the lender failed to conduct proper affordability checks, that the credit relationship was unfair under Section 140A of the CCA, and that the lender should have paid their Section 75 claim. The ombudsman found no actionable misrepresentation, no evidence the lending was unaffordable, and that Mr and Mrs K's purchase was motivated by multiple factors (holidays, defined membership term, potential profit) rather than investment returns alone. The undisclosed commission of 8% was not disproportionate compared to the Supreme Court's Hopcraft/Johnson/Wrench precedent (55% commission). The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches automatically create unfairness (they do not). The key finding was that Mr and Mrs K's purchase decision was not primarily motivated by the prospect of financial gain from the property sale, but rather by multiple factors including better holidays and a defined membership term. Therefore, even if the supplier breached Regulation 14(3) by marketing as an investment, this did not render the credit relationship unfair. The commission of 8% was not high enough to be disproportionate, especially given Mr and Mrs K's limited means to pay otherwise. The ombudsman distinguished the case from Hopcraft/Johnson/Wrench where commission was 55%. No actionable misrepresentation was found because the statements about property ownership and sale proceeds were not false statements of existing fact, but rather honestly held opinions about future events.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website