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 Timeshare Regulations 2010 Regulation 14(3) complaint against Shawbrook Bank Limited

Decision detail

Summary

Miss H purchased Fractional Club timeshare membership financed by Shawbrook Bank Limited and later complained that the supplier misrepresented the product as an investment and that the lender participated in an unfair credit relationship. The ombudsman found no actionable misrepresentation because statements about property ownership and future sale proceeds were honestly held opinions rather than false facts. Although the supplier may have breached regulations prohibiting marketing timeshares as investments, Miss H's own account showed her purchase was motivated by accommodation quality, not financial gain, so any breach did not materially influence her decision. The lender paid no commission to the supplier and owed no fiduciary duty, distinguishing this case from recent Supreme Court precedent. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches (if any) rendered the credit relationship unfair in practice. Key findings: (1) statements about property ownership and future sale proceeds were not false statements of fact but honestly held opinions; (2) Miss H's own recollections showed her purchase was motivated by accommodation quality, not financial gain; (3) even if the supplier breached Regulation 14(3) by marketing as an investment, this did not materially influence Miss H's decision; (4) no evidence of fiduciary duty owed by supplier to Miss H; (5) no commission was paid by lender to supplier at time of sale, distinguishing this case from Johnson; (6) regulatory breaches do not automatically create unfairness under Section 140A and must be assessed for actual impact.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website