Not upheld: section 75 misrepresentation claim and section 140A unfair credit relationship (alleged breach of Timeshare Regulations Regulation 14(3) and undisclosed commission) complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs B purchased a Fractional Club timeshare membership for £14,430 financed by Shawbrook Bank in August 2018. The membership included a share in property sale proceeds at term end. Over three years later, Mrs B complained that the supplier misrepresented the product as an investment in breach of Timeshare Regulations and that the lender participated in an unfair credit relationship by failing to disclose commission and allowing the supplier to market the product as an investment. The ombudsman found no actionable misrepresentation under section 75 and concluded that even if the supplier breached Regulation 14(3), Mrs B's own evidence showed she was motivated by receiving property proceeds rather than investment profit, so any breach was not material to her purchasing decision. The undisclosed commission of 5% was not so high as to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier under section 75 because: (1) statements about property appreciation were opinions honestly held, not false statements of fact; and (2) claims about resale and holiday access lacked sufficient evidence. Regarding section 140A unfairness, the ombudsman concluded that even if the supplier breached Regulation 14(3) by marketing the product as an investment, Mrs B's own evidence showed her primary motivation was receiving property sale proceeds, not investment profit. The ombudsman distinguished this from the Supreme Court's Johnson case where commission was 55% of credit charges; here it was only 5%, and Mrs B would have proceeded with the loan regardless of commission disclosure. The supplier did not owe Mrs B a fiduciary duty when acting as credit broker, so secret commission remedies were unavailable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website