Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; rejection of Section 75 claim for misrepresentation; alleged breach of Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs M complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claim for misrepresentation relating to the purchase of fractional points in a timeshare (Fractional Club) financed through two credit agreements in 2013 and 2016. They alleged the supplier marketed the timeshare as an investment in breach of Regulation 14(3) of the Timeshare Regulations, failed to provide adequate information, and that undisclosed commission payments rendered the relationship unfair. The ombudsman found the Section 75 claim was time-barred as it was raised more than six years after the purchases. Although the ombudsman acknowledged the supplier may have breached Regulation 14(3), it found this did not render the credit relationship unfair because Mr and Mrs M's own testimony did not demonstrate that the prospect of financial gain was an important motivating factor in their purchasing decisions. The commission payment was found to be low (10% of amount borrowed) and therefore not disproportionate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic assessment under Section 140A of the Consumer Credit Act 1974, considering the supplier's commercial conduct, information provision, evidence of what was said at the times of sale, inherent probabilities, and commission arrangements. The key finding was that even if the supplier breached Regulation 14(3) by marketing the timeshare as an investment, this did not render the credit relationship unfair because Mr and Mrs M's own testimony did not demonstrate that the prospect of financial gain was an important and motivating factor in their purchasing decisions. The ombudsman found that Mr and Mrs M would have proceeded with the purchases regardless of any breach. The Section 75 claim was rejected as time-barred under the Limitation Act 1980, as more than six years had passed since the times of sale. The commission payment was found to be low (10% of amount borrowed, 5.47% of charge for credit) and therefore not disproportionate, particularly given the Supreme Court's guidance in Hopcraft, Johnson and Wrench that high commissions (such as 55%) are a powerful indication of unfairness.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website