Not upheld: unfair credit relationship (Section 140A CCA), connected lender liability (Section 75 CCA), irresponsible lending, misrepresentation, breach of contract, undisclosed commission, breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs B complained that Shawbrook Bank Limited acted unfairly by financing a timeshare purchase and subsequently rejecting Section 75 claims for misrepresentation and breach of contract. She also alleged the credit relationship was unfair under Section 140A due to inadequate affordability checks, pressure from the supplier, unfair contract terms, breach of Timeshare Regulations, and undisclosed commission. The ombudsman found no factual misrepresentation by the supplier regarding the investment element, as Mrs B understood the potential profit was not guaranteed. Although the supplier may have breached Regulation 14(3) by positioning the timeshare as an investment, this did not render the credit relationship unfair because Mrs B's purchase motivation was not financial gain. The commission of £516.90 (5% of borrowing) was low and would not have deterred her. The ombudsman concluded the lender acted fairly in rejecting the Section 75 claims and was not party to an unfair credit relationship.

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 Mrs B's purchase was not motivated by the prospect of financial gain from the allocated property, despite the investment element being present. The commission was low (5%) compared to the 55% in the Supreme Court's Johnson case, and Mrs B would have proceeded with the loan regardless of disclosure. The supplier's sales process, while possibly leaving open the possibility of positioning membership as an investment, did not constitute a factual misrepresentation. Information failings, even if they existed, were not material to Mrs B's decision-making as she did not rely on financial gain as a motivating factor.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website