Not upheld: section 75 claims (misrepresentation and breach of contract); section 140A unfair credit relationship; irresponsible lending; undisclosed commission; breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs C and Mr C (later the Estate of Mr C) complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship when financing a Fractional Club timeshare purchase for £17,000 in October 2013, and by rejecting their section 75 claims against the supplier for misrepresentation and breach of contract. The ombudsman found no actionable misrepresentation (the representations about property ownership, guaranteed sale dates, and savings were either accurate or not proven false), no breach of contract (any breach was future and uncertain), and no unfair credit relationship under section 140A. Although the supplier may have breached Regulation 14(3) by marketing the product as an investment and the lender failed to disclose a £1,360 commission payment, these failings did not render the relationship unfair because the evidence showed the consumers' primary motivation was the 26-year reduction in management fees, not investment returns. The ombudsman gave greater weight to the original letter of complaint (made in 2017, closer to the time of sale) than to Mrs C's later undated statement (provided in 2023), which contained inaccuracies and confusion between different timeshare purchases. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 75 of the CCA and found no actionable misrepresentation because: (1) telling consumers they were buying a share of specific properties was not untrue; (2) the 'proposed' sale date made clear it was not guaranteed; (3) the savings claim was factually accurate given the 26-year reduction in membership term. On section 140A, the ombudsman found the credit relationship was not unfair because: (1) the supplier's conduct during antecedent negotiations (deemed to be the lender's conduct under section 56) did not render the relationship unfair; (2) even if Regulation 14(3) of the Timeshare Regulations was breached (selling as an investment), this would not have motivated the purchase, as the evidence showed the primary motivation was the savings in management fees; (3) the commission, while undisclosed, was modest (8.72% of charge for credit) and would not have changed the purchasing decision; (4) there was no evidence of pressure, irresponsible lending, or unaffordability; (5) Mrs C's later testimony was unreliable, containing inaccuracies and confusion between different timeshare purchases, whereas the original letter of complaint (made closer to the time of sale) was more reliable and did not emphasize investment motivation. The ombudsman applied the principle from Plevin that regulatory breaches do not automatically create unfairness and must be considered in the round with reference to causation and impact on the consumer's decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website