Not upheld: unfair credit relationship under section 140A CCA; section 75 connected lender liability claims; undisclosed commission; alleged breach of Timeshare Regulations 2010 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs G purchased Fractional Club timeshare membership in April 2014 for £8,858 financed by Shawbrook Bank Limited. They complained in February 2017 alleging misrepresentation and breach of contract by the supplier (grounds for section 75 claims), an unfair credit relationship under section 140A, breach of Timeshare Regulations, and undisclosed commission. An investigator upheld the complaint but an ombudsman's provisional decision rejected it. The final decision upheld the provisional findings, finding no actionable misrepresentation, no breach of contract, and no unfair credit relationship. Although a possible breach of Regulation 14(3) existed, the evidence showed the purchase was motivated by shorter membership term and holiday rights rather than investment returns. The undisclosed commission of £885.80 (10% of borrowed amount) was not sufficiently high to render the relationship unfair, particularly as Mr and Mrs G received pricing information and repaid the loan within three months.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding the guaranteed end date, exclusivity, or as the only way to exit existing membership. Regarding section 75 breach of contract claims, the evidence did not demonstrate that Mr and Mrs G were no longer members or unable to use their membership. On section 140A unfairness, while a possible breach of Regulation 14(3) existed (marketing as investment), the evidence showed Mr and Mrs G's purchase was motivated by shorter term and additional holiday rights rather than investment returns. The commission of £885.80 (10% of borrowed amount) was not high enough to render the relationship unfair, particularly given Mr and Mrs G received pricing information and repaid the loan within three months. The ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench framework and found the factors did not support unfairness in these circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website