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

Decision detail

Summary

Mr D and Mrs D complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claim regarding the purchase of Fractional Club timeshare membership for £16,749 in March 2012. They alleged the supplier misrepresented the product as an investment and breached Regulation 14(3) of the Timeshare Regulations, and that undisclosed commission arrangements rendered the credit relationship unfair. The ombudsman found no actionable misrepresentation, no breach of contract, and no unfair credit relationship. While acknowledging the possibility of a regulatory breach, the ombudsman concluded Mr D and Mrs D were primarily motivated by holiday benefits rather than investment returns, and the commission arrangements at 10.25% of the borrowed amount were not sufficiently high to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no factual misrepresentation regarding investment value or guaranteed end dates, as such statements reflected the actual contract terms. While acknowledging the possibility that the supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman concluded this was not material to the decision to purchase, as Mr D and Mrs D were primarily motivated by holiday benefits rather than financial gain. The evidence of their motivations was undermined by the leading nature of the questionnaire used and the lack of persuasive narrative detail in their statements. The commission arrangements, at 10.25% of the borrowed amount, were not so high as to render the credit relationship unfair, particularly given the low proportion relative to the charge for credit and the absence of evidence that commission affected the interest rate. The ombudsman applied the principle from case law that regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website