Not upheld: unfair credit relationship under Section 140A CCA; connected lender liability under Section 75 CCA; alleged breach of Regulation 14(3) Timeshare Regulations; undisclosed commission; misrepresentation; breach of contract complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr M complained that Shawbrook Bank acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims against the timeshare supplier. Mr M financed a Fractional Club timeshare membership (asset-backed with a property share) through a £20,402 credit agreement. He alleged the supplier misrepresented the product as an investment in breach of Regulation 14(3), failed to disclose commission, and provided insufficient information about the allocated property's encumbrances. The ombudsman found no actionable misrepresentation, no breach of contract regarding holiday availability, and no unfair credit relationship because Mr M's purchase was not motivated by investment returns. The undisclosed commission of 5% was too low to create unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, finding that regulatory breaches do not automatically create unfairness. The key finding was that Mr M's purchase was not motivated by the prospect of financial gain from the property share, even if the supplier had breached Regulation 14(3) by marketing the product as an investment. The commission of 5% was low compared to the Supreme Court's benchmark case (55%), and Mr M would have proceeded with the loan regardless of disclosure. The ombudsman found no actionable misrepresentation, no breach of contract regarding holiday availability, and no unfair contract terms operated unfairly in practice.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website