Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 claim for misrepresentation; undisclosed commission payments complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs P complained to Shawbrook Bank Limited about two timeshare finance agreements for fractional points in a 'Fractional Club' product purchased in March 2018. They alleged the Supplier misrepresented the product and that the Lender was party to an unfair credit relationship, citing alleged misrepresentations about investment potential, guaranteed end dates, exclusivity, and undisclosed commission payments. The ombudsman found no actionable misrepresentation under section 75 of the CCA because the investment element was genuine and there was insufficient evidence of other alleged misrepresentations. Under section 140A, the ombudsman found the credit relationship was not unfair because the lending was affordable, there was no evidence of pressure, Mr and Mrs P's own evidence did not support that investment potential was a motivating factor, and the commission level (5% of amount borrowed) was not high enough to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no factual and material misrepresentation by the Supplier under section 75 because: (1) describing Fractional Club as an investment was not untrue given the property share element; (2) there was insufficient evidence of a guaranteed end date; and (3) insufficient evidence regarding exclusivity claims. Under section 140A, the ombudsman considered whether the credit relationship was unfair, examining the Supplier's sales practices, information provision, and commission arrangements. The ombudsman found: (1) no evidence that lending was unaffordable; (2) insufficient evidence of pressure preventing choice; (3) even if Regulation 14(3) of the Timeshare Regulations was breached regarding marketing as an investment, Mr and Mrs P's own evidence did not show this was a motivating factor in their purchase decision; and (4) the commission level (5% of amount borrowed) was not high enough to render the relationship unfair, particularly in contrast to the Supreme Court's findings in Hopcraft, Johnson and Wrench where commission was 55%.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website