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

Decision detail

Summary

Mrs H purchased Fractional Club timeshare membership for £13,910 in April 2017, financed by a loan from Shawbrook Bank Limited. The membership included holiday rights and a share in the net proceeds of an allocated property. In September 2023, more than six years later, Mrs H complained that the lender had acted unfairly by rejecting her Section 75 claims and by being party to an unfair credit relationship. She alleged the supplier had misrepresented the product, marketed it as an investment in breach of Regulation 14(3) of the Timeshare Regulations, applied pressure during the sales process, and that undisclosed commission arrangements existed. The ombudsman found the Section 75 claim was time-barred under the Limitation Act 1980. Regarding the Section 140A unfair relationship claim, while acknowledging a possible breach of Regulation 14(3), the ombudsman found this was not causative of the credit relationship being unfair because Mrs H's primary motivation for purchase was a free holiday incentive rather than the prospect of financial gain from the property share. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, finding that regulatory breaches do not automatically render a credit relationship unfair. The key reasoning was: (1) the Section 75 misrepresentation claim was time-barred as it was made more than six years after the purchase; (2) there was no evidence of actionable misrepresentation regarding holiday availability; (3) while the supplier may have breached Regulation 14(3) by marketing the product as an investment, this was not causative of Mrs H's purchase decision, as she was primarily motivated by the offer of a free holiday and desire to end the sales meeting; (4) the evidence did not demonstrate that Mrs H would have made a different purchasing decision had there been no breach; (5) no commission was paid by the lender to the supplier, distinguishing this case from the Supreme Court's Johnson decision; (6) the ombudsman applied the causation principles from Carney and Kerrigan, finding that the alleged breaches had no material impact on Mrs H's decision to enter the agreement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website