Not upheld: irresponsible lending / unfair credit relationship / connected lender liability under Section 75 CCA / breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr T and Mrs T complained that Shawbrook Bank Limited acted unfairly by financing a Fractional Club timeshare membership purchase in October 2014 for £7,500, alleging the supplier misrepresented it as an investment and that the credit relationship was unfair under Section 140A of the CCA. The ombudsman found no actionable misrepresentation under Section 75 (statements about property appreciation were opinions, not false facts; representations about membership term were not untrue). Although acknowledging a possible breach of Regulation 14(3) prohibiting marketing timeshares as investments, the ombudsman found Mr T and Mrs T were not motivated by profit prospects based on their own witness statement, which focused on property ownership, term, fees, and exclusivity rather than investment gain. The ombudsman rejected the professional representative's arguments and declined an oral hearing, concluding the credit relationship was not unfair and the lender acted reasonably in rejecting the claim.

The Ombudsman's reasoning

The ombudsman applied a balance of probabilities test in an inquisitorial jurisdiction. On Section 75 claims, no actionable misrepresentation was found because: (1) statements about property appreciation were opinions honestly held, not false statements of fact; (2) representations about membership term were not untrue given the contractual provisions allowing postponement; and (3) allegations about exclusivity were too vague and Mr T and Mrs T, as regular users, would have known non-members could access resorts. On the Section 140A unfair credit relationship claim, although a possible breach of Regulation 14(3) (marketing as investment) was acknowledged, the ombudsman found Mr T and Mrs T were not motivated by profit prospects because: their own statement did not emphasize investment gain; they did not describe themselves as having lost out on profit; their focus was on term, maintenance fees, and exclusivity; they had previously cancelled a similar product but did not cancel this one; and they made a subsequent similar purchase. The ombudsman rejected the PR's arguments that the wish-to-rent scheme or Link Financial case demonstrated unfairness, and declined to hold an oral hearing as sufficient evidence was already on file.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website