Not upheld: misrepresentation (Section 75 CCA), unfair credit relationship (Section 140A CCA), undisclosed commission, breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs B purchased Fractional Club timeshare membership in April 2018 for £14,705, financed by a £18,912 loan from Shawbrook Bank Limited. The membership included a share in an allocated property's net sale proceeds. They complained that the product was misrepresented as an investment in breach of Timeshare Regulations, that they were pressured into the purchase, that contract terms were unfair, and that commission paid to the supplier was undisclosed. The ombudsman found no actionable misrepresentation because the investment element was factually true and the complainants' purchase was motivated by holiday rights rather than investment returns. Even if the supplier breached the prohibition on marketing timeshares as investments, this would not have affected the purchasing decision. The undisclosed commission of £945.60 (5% of borrowing) was too low to render the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A unfairness, considering whether any breaches of regulations or commercial practices materially impacted the complainants' decision to purchase. The key finding was that Mr and Mrs B's purchase was motivated primarily by holiday rights and exclusivity benefits, not by the prospect of financial gain from the property share. Therefore, even if the supplier breached Regulation 14(3) by marketing the product as an investment, or if there were information failings, these would not have changed the purchasing decision. The commission of £945.60 was low (5% of borrowing) and did not create the extreme inequality of knowledge required under Section 140A. The ombudsman rejected the misrepresentation claims because: (1) telling prospective members they were investing in a property share was factually true; (2) no written representations promised a profit; (3) no credible evidence of oral misrepresentations about guaranteed returns; and (4) the purchase was not motivated by investment returns anyway.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website