Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; Section 75 claims for misrepresentation and breach of contract; undisclosed commission; alleged breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr C complained that Shawbrook Bank Limited acted unfairly by financing a timeshare purchase that was misrepresented as an investment and by failing to disclose commission arrangements. The timeshare, purchased on 8 October 2018 for £13,430, included fractional ownership of a property and holiday rights. The ombudsman found no actionable misrepresentation under Section 75 of the CCA, as statements about investment potential were opinions rather than false facts, and holiday availability limitations were disclosed. Under Section 140A, the ombudsman found no unfair credit relationship, concluding that even if the supplier breached Regulation 14(3) by marketing as an investment, this was not material to the consumers' decision, which was motivated by holiday access rather than profit expectations. The undisclosed commission of £671.50 (5% of credit) was too modest to render the relationship unfair. The complaint was rejected entirely.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, this was not material to the consumers' purchasing decision. The evidence, particularly Mr C's own testimony, did not demonstrate that the prospect of financial gain was an important motivating factor. The ombudsman was cautious about Mr C's witness statement due to its timing after a similar case judgment, which risked influencing his recollections. Regarding commission, the amount (5% of credit) was not high enough to render the relationship unfair, particularly as Mr C wanted the product and had no alternative means to pay. The ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles and found no fiduciary duty owed by the supplier as credit broker, and no sufficiently extreme inequality of knowledge. Regulatory breaches do not automatically create unfairness under Section 140A; they must be considered in the round with their actual impact.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website