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

Decision detail

Summary

Mr L and Ms N complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 misrepresentation claim relating to a Fractional Club timeshare purchase financed by a £30,484 credit agreement. They alleged the Supplier misrepresented the membership as an investment and as providing secured holiday accommodation, and that the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing it as an investment. The ombudsman found the Section 75 claim failed because the £34,000 purchase price exceeded the £30,000 statutory threshold. For the Section 140A unfair relationship claim, the ombudsman found no credible evidence of actionable misrepresentation and determined that even if Regulation 14(3) had been breached, it would not render the relationship unfair because Mr L and Ms N's primary motivation was holiday accommodation, not investment returns. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether any alleged breaches (including potential breach of Regulation 14(3) of the Timeshare Regulations) rendered the credit relationship unfair. The key finding was that even if the Supplier had breached Regulation 14(3) by marketing the membership as an investment, this would not have rendered the relationship unfair because Mr L and Ms N's primary motivation for purchase was holiday accommodation, not investment returns. The ombudsman found no credible evidence of actionable misrepresentation, noting that Mr L and Ms N's own testimony did not support allegations of false statements of fact. The Section 75 claim failed on the threshold issue that the purchase price of £34,000 exceeded the £30,000 limit. The commission arrangement (5% of amount borrowed) was found to be low and not disproportionate, distinguishable from the 55% commission in the Johnson case.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website