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

Decision detail

Summary

Mr and Mrs D purchased Fractional Club timeshare membership for £14,246 (net) in January 2018, financed by Shawbrook Bank Limited. They complained that the Lender was party to an unfair credit relationship and should pay a Section 75 claim for alleged misrepresentation by the Supplier. The ombudsman rejected the Section 75 claim as the purchase price exceeded the £30,000 limit. For the Section 140A unfair credit relationship claim, the ombudsman found that although the Supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, the evidence did not persuade the ombudsman that investment returns were a material motivating factor in Mr and Mrs D's purchase decision. The ombudsman concluded the credit relationship was not unfair and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any regulatory breach by the Supplier materially affected the fairness of the credit relationship. Following case law establishing that regulatory breaches do not automatically create unfairness, the ombudsman examined whether Mr and Mrs D's purchase decision was motivated by any alleged breach of Regulation 14(3) (prohibition on marketing timeshares as investments). The ombudsman found the evidence ambiguous but ultimately not persuasive that investment returns were a material motivating factor. The evidence suggested Mr and Mrs D were primarily motivated by holiday entitlement and accommodation benefits. Therefore, even if a breach occurred, it was not material to the credit relationship's fairness.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website