Not upheld: misrepresentation under Section 75 of Consumer Credit Act 1974; unfair credit relationship under Section 140A of Consumer Credit Act 1974; alleged breach of Regulation 14(3) of Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr B financed a Fractional Club timeshare membership purchase through Shawbrook Bank with a loan of £19,703. The membership included both holiday accommodation rights and a share in an allocated property's net sale proceeds. Mr B complained that the supplier misrepresented the product and that the lender was party to an unfair credit relationship. The ombudsman found no actionable misrepresentation because the statements made were not untrue. Regarding the unfair relationship claim, although the ombudsman acknowledged it was possible the supplier breached the prohibition on marketing timeshares as investments, this did not render the credit relationship unfair because Mr and Mrs B's primary motivation was obtaining discounted holidays, not investment returns. The ombudsman rejected the complaint, finding the lender acted fairly in rejecting the Section 75 claim and was not party to an unfair credit relationship.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation under Section 75 because the statements made about the product were not untrue - the membership did provide holiday accommodation and did include a share in an allocated property. Regarding Section 140A unfairness, the ombudsman concluded that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this would not have rendered the credit relationship unfair because the primary motivation for purchase was the holidays the membership could provide, not the investment element. The ombudsman relied on case law establishing that regulatory breaches do not automatically create unfairness and that causation (whether the breach materially influenced the decision to enter the agreement) is an important consideration. The evidence showed Mr and Mrs B would likely have purchased the membership for holiday purposes regardless of any investment marketing.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website