Not upheld: unfair credit relationship (section 140A), section 75 liability, alleged breach of Timeshare Regulations, undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Ms A and Ms E complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their section 75 claim against the timeshare supplier. They alleged the Fractional Club membership was misrepresented as having a guaranteed end date and was marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations. The ombudsman found no actionable misrepresentation regarding the end date or breach of contract regarding holiday availability. Although the ombudsman acknowledged the possibility that the supplier breached Regulation 14(3) by marketing the membership as an investment, it concluded this was not material to the complainants' decision, as their primary motivation was additional holiday rights. The ombudsman also rejected arguments about inadequate affordability checks, sales pressure, unfair contract terms, and undisclosed commission, finding the commission level (10% of amount borrowed) was not so high as to render the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding the guaranteed end date, exclusivity, or breach of contract regarding holiday availability. While acknowledging the possibility that the supplier may have breached Regulation 14(3) by marketing the membership as an investment, the ombudsman concluded this was not material to Ms A and Ms E's decision to purchase, as their primary motivation was additional holiday rights rather than financial gain. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench regarding commission disclosure, finding that the commission of 10% was not so high as to render the credit relationship unfair, particularly given that Ms A and Ms E had the price information and would have proceeded with the purchase regardless. The ombudsman rejected arguments about inadequate affordability checks, pressure during sales, unfair contract terms, and unjust enrichment, finding insufficient evidence of material impact on the fairness of the credit relationship.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website