Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; alleged misrepresentation and breach of contract under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations 2010; undisclosed commission arrangement complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr D purchased Fractional Club timeshare membership for £9,150 in February 2013, financed by a loan from Shawbrook Bank Limited. The membership included holiday entitlement and a share in net proceeds from an allocated property. Mr D complained in March 2018 that the supplier had misrepresented the product, that the lender had irresponsibly lent, and that the lender was party to an unfair credit relationship, citing alleged breaches of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments) and undisclosed commission. The ombudsman found no actionable misrepresentation, no evidence the loan was unaffordable, and crucially, no evidence that any investment marketing was material to Mr D's purchase decision. The ombudsman noted that Mr D's original 9-page complaint made no mention of investment concerns, that he had taken 32 holidays using the membership, and that his testimony about investment marketing was only submitted in December 2023, shortly after a relevant court judgment, raising concerns about reliability. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any alleged breaches or failings were material to Mr D's decision to purchase. While acknowledging that a breach of Regulation 14(3) was possible, the ombudsman found this was not determinative without evidence that it motivated the purchase. The ombudsman placed limited weight on Mr D's late testimony about investment marketing (submitted December 2023, after the Shawbrook & BPF judgment), finding it likely tainted by the litigation process. The ombudsman concluded the primary motivation was holiday entitlement, evidenced by Mr D's purchase history, the 32 holidays taken, and the absence of any mention of investment concerns in the original 9-page Letter of Complaint. The ombudsman found the commission arrangement (5.6% of credit charge) was not so high as to render the relationship unfair, and Mr D had sufficient information to understand the cost of credit. No evidence demonstrated the loan was unaffordable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website