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

Decision detail

Summary

Mr and Mrs A complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claims regarding the purchase of Signature Collection timeshare membership for £12,216 in March 2019. They alleged the supplier had misrepresented the membership as an investment and breached the Timeshare Regulations. An investigator upheld the complaint, but the ombudsman disagreed. The ombudsman found that while the membership included an investment element (share in allocated property), this was not an actionable misrepresentation as it was factually true. More importantly, the ombudsman concluded that Mr and Mrs A's primary motivation for purchase was the holiday benefits, not investment returns, making any breach of the Timeshare Regulations immaterial to their decision. The ombudsman also found the 5% commission was not disproportionately high and that Mr and Mrs A had sufficient information about the credit cost. Accordingly, the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the Signature Collection membership included an investment element (share in allocated property), this did not constitute an actionable misrepresentation under Section 75 as it was factually true that the property could be sold at a profit. Regarding Section 140A, the ombudsman concluded that even if the supplier had breached Regulation 14(3) by marketing the membership as an investment, this was not material to Mr and Mrs A's decision to purchase, as their primary motivation was the holiday benefits rather than investment returns. The ombudsman noted that Mr and Mrs A's own statement focused on holiday benefits and luxury upgrades, not investment potential. The commission of 5% was found to be low and not disproportionate, and Mr and Mrs A were provided with sufficient information about the cost of the credit agreement to make an informed comparison. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, distinguishing this case on the basis that the commission was not 'so high' as to indicate unfairness, and that the supplier did not owe a fiduciary duty to the complainants.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website