Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; alleged misrepresentation and breach of Timeshare Regulations; Section 75 claims complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs W purchased FPOC timeshare membership in September 2016 financed by a £20,651 loan from Shawbrook Bank Limited, repaid in 2021. In May 2023, they complained that the Lender acted unfairly by being party to an unfair credit relationship and by declining Section 75 claims for misrepresentation. The complainants alleged the FPOC membership was misrepresented as an investment opportunity in breach of Regulation 14(3) of the Timeshare Regulations, and that insufficient affordability checks and information were provided. The ombudsman found that even if such breaches occurred, they did not render the credit relationship unfair because the prospect of financial gain was not a material factor in the purchase decision, evidenced by the investment claim being absent from the original complaint made 7 years later and only appearing in a late statement provided after FOS referral. The ombudsman also found no misrepresentation regarding savings claims and no evidence of unaffordable lending, and distinguished the case from recent Supreme Court authority on commission because no commission was paid by the Lender to the Supplier.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the Consumer Credit Act 1974 to assess whether the credit relationship was unfair. The key reasoning was that even if the Supplier had breached Regulation 14(3) by marketing FPOC membership as an investment, this would not render the credit relationship unfair unless it was a material factor in Mr and Mrs W's decision to purchase. The ombudsman found that the prospect of financial gain was not an important and motivating factor in their purchase decision, evidenced by: (1) the Letter of Complaint made 7 years later did not mention investment claims despite covering 10 pages of other concerns; (2) Mr and Mrs W's statement mentioning investment was only provided after the FOS referral and after the Shawbrook & BPF v FOS judgment; (3) their stated primary motivation was to holiday at a specific resort; and (4) they did not cancel during the 14-day cooling-off period. The ombudsman also found no misrepresentation regarding savings claims (characterized as opinion rather than fact) and no evidence that lending was unaffordable. Regarding commission, the ombudsman distinguished this case from Hopcraft, Johnson and Wrench because no commission was actually paid by the Lender to the Supplier.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website