Not upheld: unfair credit relationship; section 75 misrepresentation claim; undisclosed commission; potential breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr D purchased a Fractional Club timeshare membership for £14,985 in December 2017, financed through a credit agreement with Shawbrook Bank Limited. In June 2021, through a professional representative, Mr D complained that the Supplier had misrepresented the product and that the Lender was party to an unfair credit relationship, citing potential breaches of Section 75 and Section 140A of the Consumer Credit Act 1974, as well as Regulation 14(3) of the Timeshare Regulations. The ombudsman found no actionable misrepresentation under Section 75, as describing the asset-backed membership as an investment was not untrue. Regarding Section 140A, the ombudsman concluded that even if the Supplier breached the prohibition on marketing timeshares as investments, Mr D's purchase was not motivated by investment prospects, and the undisclosed commission of 5% was insufficient to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation under Section 75 because: (1) describing the product as an investment was not untrue given the property share element; (2) there was insufficient evidence of false statements regarding guaranteed end dates, exclusivity, or being the only way to exit existing membership. Regarding Section 140A, the ombudsman concluded the credit relationship was not unfair because: (1) the lending was affordable; (2) there was insufficient evidence of pressure from the Supplier; (3) even if Regulation 14(3) of the Timeshare Regulations was breached regarding marketing as an investment, Mr D's purchase was not motivated by investment prospects; (4) the commission of 5% was not high enough to render the relationship unfair, particularly when compared to the 55% commission in the Johnson case; (5) the Supplier did not owe Mr D a fiduciary duty; and (6) Mr D would have proceeded with the purchase regardless of commission disclosure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website