Not upheld: section 75 liability for misrepresentation; unfair credit relationship under section 140A of the CCA; undisclosed commission; breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Ms G complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting a section 75 claim regarding their 2017 purchase of Fractional Club timeshare membership for £14,910. The timeshare was asset-backed, including a share in an allocated property's net sale proceeds. The complainants alleged the supplier misrepresented the product as an investment, with a guaranteed end date, and that it was the only way to exit existing membership. They also raised concerns about inadequate affordability checks, sales pressure, unfair contract terms, and undisclosed commission (£745.50). The ombudsman found no factual misrepresentation, as the investment element was genuine and Mr and Ms G's own testimony did not indicate investment prospects motivated their purchase. While acknowledging a possible breach of Regulation 14(3) of the Timeshare Regulations, the ombudsman concluded this was not material to the fairness of the credit relationship. The undisclosed commission was found immaterial given its low level (5% of borrowing) compared to the Supreme Court's recent Hopcraft/Johnson/Wrench decision, and Mr and Ms G had full pricing information. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no factual and material misrepresentation by the supplier regarding investment potential, guaranteed end dates, exclusivity, or necessity of the purchase. While acknowledging the supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman concluded this was not material to Mr and Ms G's decision, as their own testimony did not indicate investment prospects motivated their purchase. Regarding commission, the ombudsman distinguished this case from the Supreme Court's Hopcraft/Johnson/Wrench decision on the basis that the commission (5% of amount borrowed) was significantly lower than the 55% in Mr Johnson's case, Mr and Ms G had full pricing information, and there was no evidence of a fiduciary duty owed by the supplier. The ombudsman found no unfairness in the credit relationship overall.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website