Not upheld: Goods and services under S75 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs B and Mr H complained that Shawbrook Bank acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claim regarding a Fractional Club timeshare purchase financed in March 2015. They alleged the supplier misrepresented the product as a secure holiday investment that could be sold for profit, breached Regulation 14(3) of the Timeshare Regulations by marketing it as an investment, failed to disclose material information about encumbrances on the property, and that undisclosed commission arrangements rendered the credit relationship unfair. The ombudsman found no actionable misrepresentation under Section 75, as the statements about holiday security and resale potential were factually accurate. On Section 140A, while acknowledging a possible regulatory breach regarding investment marketing, the ombudsman found the complainants' own evidence showed investment returns did not motivate their purchase, no commission was actually paid by the lender, and the alleged property encumbrance was speculative and unsupported. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering regulatory breaches do not automatically create unfairness. On Section 75, the statements that Fractional Club membership would secure holiday accommodation and could be sold for profit were not factually untrue. On Section 140A, the ombudsman found: (1) insufficient evidence of pressure despite a lengthy sales process, given the 14-day cooling-off period was not used; (2) even if Regulation 14(3) was breached regarding marketing as investment, the complainants' own evidence showed investment returns were not a motivating factor in their purchase decision; (3) no fiduciary duty was owed by the supplier as credit broker since it was not acting as agent for the complainants but as seller of timeshare rights; (4) no commission was actually paid by the lender to the supplier at time of sale, distinguishing this from the Supreme Court's Hopcraft/Johnson/Wrench precedent; (5) the alleged debenture encumbrance was speculative and unsupported by compelling evidence, and even if true, would not have affected the purchase decision given the complainants were not investment-motivated; (6) the cost of membership was not so irrational as to require an investment promise, as complainants knew the borrowing amount, interest cost, annual charges, and holiday entitlements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website