Not upheld: unfair credit relationship under Section 140A CCA; Section 75 CCA liability; alleged misrepresentation and breach of contract; alleged breach of Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs and Mr M purchased a Signature Collection fractional timeshare membership in May 2017 for £13,397, borrowing £29,409 through Shawbrook Bank Limited. The membership included 1,820 holiday points and a share in an Allocated Property's sale proceeds. They complained in February 2019 alleging the supplier misrepresented the product as having a guaranteed end date, being the only way to exit their existing membership, and being resort-exclusive, and that it was marketed as an investment in breach of Timeshare Regulations. They also alleged undue pressure, unfair contract terms, and undisclosed commission. The ombudsman found no credible evidence of actionable misrepresentation, rejected the undue pressure claim noting they had experienced a similar sales process in 2016 and failed to use the 14-day cooling off period, and concluded that even if the product was marketed as an investment in breach of Regulation 14(3), this was not material to their decision as they were primarily upgrading to a superior product. The commission of 4.63% of the charge for credit was found to be reasonable and not sufficiently high to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no credible evidence of actionable misrepresentation regarding the guaranteed end date, exclusivity, or release from existing membership. While acknowledging the membership included an investment element (share in Allocated Property), the ombudsman found the supplier made efforts to avoid describing it as an investment and that even if Regulation 14(3) was breached, this was not material to Mrs and Mr M's decision to purchase, as they were primarily upgrading to a superior product with more points. The ombudsman rejected allegations of undue pressure, noting Mrs and Mr M had experienced a similar sales process in 2016, were provided with a 14-day cooling off period which they did not use, and provided no credible explanation for why they did not cancel. Regarding commission, the ombudsman found the 4.63% commission was not high compared to the Supreme Court's threshold in Hopcraft, Johnson and Wrench (55%), and Mrs and Mr M had information about the price and cost of credit. The ombudsman found no fiduciary duty owed by the supplier as credit broker and concluded regulatory breaches do not automatically create unfairness under Section 140A.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website