Not upheld: connected lender liability (Section 75 CCA); unfair credit relationship (Section 140A CCA); alleged misrepresentation and breach of contract by supplier; alleged irresponsible lending; alleged undisclosed commission; alleged breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs A purchased two Fractional Club timeshare memberships (2017 and 2018) financed by Shawbrook Bank, which included shares in property proceeds. They complained in 2020 alleging: (1) Section 75 claims for misrepresentation (that memberships were marketed as investments) and breach of contract (Supplier went into administration); (2) Section 140A unfair credit relationship based on pressure, undisclosed commission, misrepresentation, and irresponsible lending; and (3) breach of Timeshare Regulations. The ombudsman found no actionable misrepresentation because contractual documents disclosed availability limitations and Mr A's testimony (provided 3.5 years later) was unreliable and inconsistent with documentary evidence. No breach of contract was proven as Mr and Mrs A continued to use their membership and retained their property share entitlement. On unfairness, the ombudsman found Mr and Mrs A's primary motivation was holiday access, not investment returns; they did not use their 14-day cooling-off period; the commission was modest at 4.6-5% of credit charge; and even if regulatory breaches occurred, they did not render the relationship unfair when assessed holistically. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering the entire credit relationship and all circumstances. On Section 75 claims, the ombudsman found no actionable misrepresentation because contractual documents clearly disclosed that accommodation was subject to availability, and no false statements of existing fact were proven. On breach of contract, the ombudsman found no evidence that Mr and Mrs A could no longer use their membership or were denied their share in property proceeds. On Section 140A unfairness, the ombudsman found: (1) no credible evidence of pressure impacting purchasing decisions, given the 14-day cooling-off period was not used and Fractional Club 1 was upgraded; (2) Mr A's testimony was unreliable, provided years later and inconsistent with documentary evidence; (3) even if Regulation 14(3) of the Timeshare Regulations was breached regarding marketing as investment, causation was not established—Mr and Mrs A's primary motivation was holiday access, not financial gain; (4) the commission was modest (4.6-5% of credit charge), far below the 55% in Johnson's case, and would not have deterred the purchase; (5) no fiduciary duty was owed by the Supplier as credit broker; (6) regulatory breaches do not automatically create unfairness under Section 140A—they must be considered in the round with all circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website