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

Decision detail

Summary

Mr and Mrs V purchased Fractional Club timeshare membership for £17,745 in September 2018, financed through a loan from Shawbrook Bank Limited. Over four years later, they complained that the lender acted unfairly by: (1) failing to accept their Section 75 claims for misrepresentation and breach of contract by the supplier; and (2) being party to an unfair credit relationship under Section 140A of the Consumer Credit Act 1974. The ombudsman found no actionable misrepresentation as the consumers provided insufficient evidence of specific false statements of fact. No breach of contract was demonstrated as the consumers remained members with access to their benefits. While a possible breach of the prohibition on marketing timeshares as investments may have occurred, the consumers' own evidence showed they were motivated by holiday access rather than financial gain, making any such breach non-causative. The commission of £887.25 (5% of the loan) was not sufficiently high to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether the credit relationship was unfair in all the circumstances. Key findings: (1) No actionable misrepresentation was proven as Mr and Mrs V provided insufficient detail about what was said and by whom; (2) No breach of contract was demonstrated as they remained members with access to their benefits; (3) While a possible breach of Regulation 14(3) (prohibition on marketing timeshares as investments) may have occurred, this was not causative of their purchase decision, as their own evidence showed they were motivated by holiday access rather than financial gain; (4) The commission of £887.25 (5% of loan) was not high enough to render the relationship unfair, particularly given they were provided with pricing information and had no alternative means to fund the purchase; (5) Regulatory breaches do not automatically create unfairness under Section 140A - the impact on the complainant must be considered; (6) The supplier did not owe a fiduciary duty to the consumers, so remedies for secret commission were unavailable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website