Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation claims under Section 75 of the Consumer Credit Act 1974; undisclosed commission arrangements complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs and Mr G purchased a Fractional Club timeshare membership for £10,000 in January 2015, financed by a credit agreement with Shawbrook Bank Limited. They later complained that the supplier misrepresented the product as an investment in breach of the Timeshare Regulations, that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974, and that the lender failed to properly handle their Section 75 claims. The ombudsman found no evidence of actionable misrepresentation, as the complainants' purchase was not motivated by investment prospects and their late testimony (provided nearly 9 years after the sale) was unreliable and uncorroborated. The ombudsman also found the credit relationship was not unfair, noting the commission was low (£100), the complainants had sufficient information about the credit costs, and regulatory breaches alone do not establish unfairness without demonstrating material impact. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, this did not render the credit relationship unfair because: (1) Mrs and Mr G's purchase was not motivated by the prospect of financial gain from the property share; (2) their late testimony (December 2023) was unreliable, uncorroborated, and likely influenced by subsequent court judgments; (3) the commission of £100 was low (1% of amount borrowed) and would not have deterred them from the purchase; (4) they had sufficient information about the cost of the credit agreement to make an informed decision; (5) the supplier did not owe a fiduciary duty to them; and (6) regulatory breaches do not automatically create unfairness under Section 140A without demonstrating material impact on the complainants.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website