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 arrangements complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs and Mr S purchased a Fractional Club timeshare membership in March 2018 for £15,430 financed through Shawbrook Bank Limited, with total repayment of £32,094 over 180 months. In May 2024, they complained that the Lender acted unfairly by being party to an unfair credit relationship and by rejecting a Section 75 claim. The complainants alleged the Supplier breached regulations by marketing the membership as an investment, failed to provide key information, applied pressure during sales, and that undisclosed commission arrangements rendered the relationship unfair. The ombudsman found the Section 75 claim was time-barred under the Limitation Act 1980 as it was brought more than six years after the purchase. Regarding Section 140A, the ombudsman concluded that even if regulatory breaches occurred, the complainants were primarily motivated by holiday enjoyment rather than investment returns and would have purchased regardless. The commission of 4.63% of the charge for credit was not sufficiently high to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Limitation Act 1980, finding that the Section 75 claim was time-barred as it was brought more than six years after the cause of action accrued on 28 March 2018. Section 32 of the Limitation Act (fraud, concealment, or mistake) was not found to extend the limitation period. Regarding Section 140A, the ombudsman found that even if the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, Mrs and Mr S were not motivated by the investment element but by holiday enjoyment. The evidence suggested they would have purchased regardless of any breach. The commission of 4.63% of the charge for credit was not high enough to render the relationship unfair, particularly in contrast to the Supreme Court's findings in Hopcraft, Johnson and Wrench where commission was 55%. The ombudsman found the consumers were provided with sufficient information about the cost of the credit agreement and had the opportunity to decline the purchase.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website