Upheld: irresponsible lending / mis-selling / unfair credit relationship under Section 140A Consumer Credit Act 1974 / breach of Regulation 14(3) Timeshare Regulations 2010 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs T purchased two fractional timeshare weeks in March 2014 for £21,750 financed by Shawbrook Bank Limited, after being promised by the Supplier that she would 'make a big profit' from the investment. The fractional weeks included a share in the property's net sale proceeds when the scheme ended in 2030. The Supplier subsequently became insolvent, preventing any sale. Mrs T complained in 2019 about mis-selling. The Ombudsman found the Supplier breached Regulation 14(3) of the Timeshare Regulations 2010 by marketing the weeks as an investment, which was prohibited. The Supplier's casual sales approach (no formal training, no structured process, missing required disclaimers) made compliance difficult to demonstrate. The breach materially affected Mrs T's purchasing decision, rendering the credit relationship unfair under Section 140A of the Consumer Credit Act 1974. The Ombudsman upheld the complaint and ordered comprehensive compensation including refund of all loan repayments, management fees, interest at 8% per annum, credit file remediation, and indemnification against ongoing liabilities.

The Ombudsman's reasoning

The Ombudsman found that the Supplier breached Regulation 14(3) of the Timeshare Regulations 2010 by marketing and selling the fractional timeshare weeks as an investment. The definition of investment as 'a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit' was applied. Although fractional weeks inherently contain an investment element (share in property sale proceeds), the regulations prohibit marketing or selling them as investments. The Supplier's casual approach to sales (no formal training, no structured process, absence of required disclaimers in Mrs T's case) created heightened risk of breach. Mrs T's own recollection of being promised a 'big profit' was accepted as credible. The High Court had endorsed that getting governance and paperwork right may not be enough with fractional timeshares. The breach was material to Mrs T's purchasing decision, as she explicitly stated she proceeded 'on the promise that I was going to make a big profit'. This rendered the credit relationship between Mrs T and the Lender unfair under Section 140A of the Consumer Credit Act 1974. Both parties accepted the provisional findings without further challenge.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website