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

Decision detail

Summary

Mr M and his late wife complained to Shawbrook Bank Limited about the purchase of a Fractional Club timeshare membership financed by a £13,449 loan in March 2012. The complaint alleged misrepresentation by the Supplier under Section 75 of the CCA and that the credit relationship was unfair under Section 140A due to pressure-selling, an excessive interest rate, undisclosed commission, and the timeshare being sold as an investment in breach of the Timeshare Regulations. The ombudsman found that Mr M's original 2017 testimony did not support the investment allegation, and his later 2023 witness statement was given minimal weight due to the risk of influence from subsequent events. The commission of 10.25% was not disproportionately high and would not have changed Mr M's decision. The ombudsman found no actionable misrepresentation, no evidence of significant pressure, and an interest rate within the normal range. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Mr M's original 2017 testimony did not support allegations of misrepresentation or that the timeshare was sold as an investment. The later 2023 witness statement, produced after the Investigator's rejection and the Shawbrook & BPF judgment, was given minimal weight due to the significant risk it had been influenced by subsequent events and the unusual clarity of recollections after 11 years. The ombudsman applied the Gestmin principles on memory fallibility and found Mr M had not proven he was motivated to purchase by investment prospects. Regarding commission, the ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles, finding the 10.25% commission was not disproportionately high (unlike the 55% in Mr Johnson's case) and would not have changed Mr M's decision had it been disclosed. The ombudsman rejected PR2's argument that the burden of proof was reversed, clarifying that while the lender must show the relationship is not unfair, the borrower must still prove factual allegations to the civil standard. No breach of Regulation 14(3) was formally found necessary as Mr M had not proven investment motivation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website