Not upheld: misrepresentation under Section 75 of the Consumer Credit Act 1974; unfair credit relationship under Section 140A of the Consumer Credit Act 1974; alleged breach of Timeshare Regulations 2010 Regulation 14(3); undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs A and Mr K purchased a fractional club timeshare membership in April 2017 for £11,565, financed by a £15,275 loan from Shawbrook Bank Limited. The membership included a share in an allocated property's net sale proceeds. In October 2023, they complained that the supplier had misrepresented the product and that the lender had participated in an unfair credit relationship, citing alleged breaches of the Timeshare Regulations and undisclosed commission payments. The ombudsman found the Section 75 misrepresentation claim time-barred under the Limitation Act 1980 (made over six years after the sale) and rejected the Section 140A unfairness claim because the complainants' purchase was motivated by holiday benefits rather than investment returns, as evidenced by their own testimony. The low commission (5% of borrowing) was not found to be disproportionate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Limitation Act 1980, finding that the six-year limitation period for misrepresentation claims under Section 75 of the CCA had expired before the complaint was made in October 2023 (more than six years after the April 2017 sale). Regarding Section 140A unfairness, the ombudsman found that even if the supplier had breached Regulation 14(3) by marketing the membership as an investment, this would not have rendered the credit relationship unfair because Mrs A and Mr K's purchase was motivated by holiday benefits rather than investment returns. The ombudsman noted that Mrs A's testimony emphasized flexibility for holidays rather than profit potential. The commission of £763.75 (5% of borrowing) was found to be low and not disproportionate, particularly when compared to the 55% commission in the Johnson case. The ombudsman applied the principle from Plevin that regulatory breaches do not automatically create unfairness under Section 140A; the impact must be considered holistically.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website