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

Decision detail

Summary

Mr and Ms L purchased Fractional Club timeshare membership in October 2012 for £8,699 net cost using credit from Shawbrook Bank Limited. In April 2023, over ten years later, they complained that the lender was party to an unfair credit relationship and rejected their Section 75 claim against the supplier for alleged misrepresentation. The ombudsman found the Section 75 claim was time-barred under the Limitation Act (six-year limit from Time of Sale) and exceeded monetary limits. Regarding the unfair relationship claim under Section 140A, the ombudsman concluded that even if the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, this breach was not material to the complainants' decision, as evidenced by their pattern of trading memberships at losses and their delayed complaint. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering that regulatory breaches do not automatically create unfairness. The key finding was that Ms L's purchase was not motivated by investment prospects, evidenced by: (1) her failure to mention holiday entitlement as a motivation despite holding multiple memberships; (2) repeated trading-in of memberships at significant losses, inconsistent with profit expectations; (3) delayed complaint (10 years post-purchase, 5 years after trade-in at £20,000 loss); and (4) vague and inconsistent statements about investment motivation. Even if Regulation 14(3) was breached, the breach was not material to the purchasing decision. The Section 75 claim was properly rejected as time-barred (more than six years after Time of Sale) and exceeding monetary limits.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website