Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation claims under Section 75 of the Consumer Credit Act 1974; breach of contract claims under Section 75; undisclosed commission; alleged breach of Regulation 14(3) of the Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs B complained that Shawbrook Bank Limited acted unfairly by financing a timeshare purchase and subsequently rejecting their claims that the supplier had misrepresented the product and breached contract, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The timeshare (Fractional Club membership) was asset-backed, including a share in property sale proceeds, and was financed by a £20,400 credit agreement with undisclosed commission of £1,632 paid to the supplier. The ombudsman found no actionable misrepresentation because the supplier made no proven false statements of existing fact, no material breach of contract because any breach was uncertain and future, and no unfair credit relationship because the investment element was not a motivating factor in the purchase (as evidenced by Mr and Mrs B's own statement containing no mention of investment considerations) and the commission level was not disproportionately high. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and commission arrangements. While accepting it was possible the supplier breached Regulation 14(3) by marketing membership as an investment, the ombudsman found this was not determinative because Mr and Mrs B's own statement contained no mention of the investment element or financial return prospects, suggesting the purchase was not motivated by investment considerations. The ombudsman found the commission (8% of borrowing) was not high enough to render the relationship unfair, especially given Mr and Mrs B had full information about the credit costs and wanted the timeshare. No actionable misrepresentation was found because the supplier made no false statements of existing fact—statements about property ownership and future sale were not proven to be false, and opinions about financial gain were not proven to be dishonestly held. The lender's affordability checks were not shown to be inadequate, and no evidence demonstrated the lending was unaffordable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website