Not upheld: unfair credit relationship under section 140A CCA; section 75 CCA claims (misrepresentation and breach of contract); alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission arrangements complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr H and Mrs C complained that Shawbrook Bank Limited acted unfairly by being party to unfair credit relationships and by rejecting their section 75 claims regarding the purchase of Fractional Club timeshare membership in 2013 for £15,240. They alleged the supplier had misrepresented the product as an investment that would appreciate in value, promised resale at profit, and guaranteed year-round accommodation access. They also claimed the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment. The ombudsman found no actionable misrepresentation, no breach of contract, and that even if the supplier had breached Regulation 14(3), this was not material to the consumers' purchasing decision, which was primarily motivated by reducing membership term liability and enhancing holiday entitlements. The ombudsman also found the commission arrangements were not unfairly high and would not have changed the consumers' decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding investment value or resale potential, as statements about appreciation appeared to be honestly held opinions rather than false statements of fact. Regarding breach of contract, the ombudsman found that while holiday availability was subject to demand, the consumers had taken plenty of holidays and the supplier had not breached the purchase agreement. On the section 140A unfair credit relationship claim, the ombudsman considered multiple factors including sales practices, information provision, and commission arrangements. Crucially, the ombudsman found that even if the supplier had breached Regulation 14(3) by marketing the membership as an investment, this was not a material motivating factor in the consumers' decision to purchase. The consumers' primary motivation appeared to be reducing their liability through shorter membership terms and enhancing their holiday entitlements, not financial gain. The commission level was low (7.6% of charge for credit) compared to the 55% in the Johnson case, and the consumers would have proceeded with the purchase regardless of commission disclosure. The ombudsman rejected arguments that bare assertions should be accepted without substantiation, citing the Samra judgment on burden of proof.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website