Not upheld: unfair credit relationship (Section 140A CCA), misrepresentation and breach of contract (Section 75 CCA), alleged breach of Timeshare Regulations 2010 Regulation 14(3), undisclosed commission, inadequate affordability checks, high-pressure sales, unfair contract terms complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs R, experienced timeshare purchasers since the mid-1990s, complained to Shawbrook Bank Limited about loans used to purchase fractional timeshare memberships in February 2013 and April 2016, alleging unfair credit relationships, misrepresentation, breach of contract, and breach of the Timeshare Regulations. They claimed the memberships were marketed as investments, subjected them to high-pressure sales, lacked proper affordability checks, and involved undisclosed commission. The ombudsman found the 2013 Section 140A complaint out of jurisdiction and the 2013 Section 75 complaint time-barred under the Limitation Act 1980, as it was raised in August 2019, more than six years after the sale. For the 2016 sale, while acknowledging a possible breach of Regulation 14(3), the ombudsman concluded the credit relationship was not unfair because Mr and Mrs R's primary motivation was holiday enjoyment rather than investment returns, and they would have proceeded with the purchase regardless of any disclosure failures. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the 2013 Section 140A complaint was out of jurisdiction under separate decision. The 2013 Section 75 complaint was time-barred under the Limitation Act 1980 as the claim was made in August 2019, more than six years after the February 2013 sale, and the ombudsman rejected arguments that Section 32 of the Limitation Act (fraud, concealment, mistake) applied. For the 2016 complaint, the ombudsman found no factual and material misrepresentation by the Supplier under Section 75, as Mr and Mrs R provided insufficient evidence of false statements of existing fact. The ombudsman found no breach of contract regarding holiday availability, as the terms stated availability was subject to demand and Mr and Mrs R had successfully used their points. Under Section 140A for the 2016 sale, the ombudsman found the credit relationship was not unfair despite possible breach of Regulation 14(3) (marketing as investment) because: (1) the investment element was not a material motivating factor in their purchase decision, given their extensive history as holiday-focused timeshare purchasers; (2) the commission was modest (7.42% of charge for credit) and would not have deterred them; (3) there was no fiduciary duty owed by the Supplier as credit broker; (4) regulatory breaches do not automatically create unfairness under Section 140A; and (5) Mr and Mrs R would have proceeded with the purchase regardless of any disclosure failures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website