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

Decision detail

Summary

Mr and Mrs T purchased Fractional Club timeshare membership in October 2017 for £16,894, financed through a £20,457 loan from Shawbrook Bank Limited. They complained in March 2023 that the Supplier had misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, and that the Lender was party to an unfair credit relationship. They also claimed the Lender should have paid a Section 75 claim for misrepresentation. The ombudsman found that while the Supplier may have marketed the membership as an investment, this was not material to Mr and Mrs T's decision to purchase, as they were primarily motivated by holiday benefits and were upgrading from an existing trial membership. The ombudsman placed little weight on their witness statements due to their late provision (7 years after the sale) and risk of external influence. Regarding the undisclosed 5% commission, the ombudsman found it was not high enough to render the credit relationship unfair under Section 140A, and Mr and Mrs T would have proceeded with the loan regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the Supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, this was not material to Mr and Mrs T's purchasing decision. The ombudsman placed little weight on Mr and Mrs T's testimony due to its late provision (7 years after the sale) and the risk it was influenced by external factors including the Shawbrook & BPF v FOS judgment. The ombudsman concluded that Mr and Mrs T would have proceeded with the purchase regardless of any investment positioning, as they were primarily motivated by holiday benefits and were upgrading from an existing trial membership. Regarding the commission issue, the ombudsman found the 5% commission was not high enough to render the credit relationship unfair, particularly given Mr and Mrs T's desire for the product and lack of alternative means to pay. The ombudsman applied the principles from Hopcraft, Johnson and Wrench but distinguished the case on the basis that the commission was low, there was no evidence of improper commercial concealment, and the consumers would have proceeded with the loan regardless of disclosure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website