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

Mr A and Mr D complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claims for misrepresentation and breach of contract relating to a Fractional Club timeshare purchase financed in January 2018. The complainants alleged the supplier misrepresented the product as an investment offering savings and exclusive access, breached the purchase agreement, and that the lender failed to conduct proper affordability checks and failed to disclose commission arrangements. The ombudsman found no evidence of actionable misrepresentation, as the complainants' purchase was motivated by holiday rights rather than investment returns, and even if the supplier had breached the Timeshare Regulations by marketing the product as an investment, this would not have affected their decision. The ombudsman also found the commission arrangement (5% of borrowed amount) was not so high or concealed as to render the credit relationship unfair under Section 140A, applying principles from the Supreme Court's Hopcraft, Johnson and Wrench judgment. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier because the complainants provided insufficient evidence of false statements of existing fact, and their purchase was not motivated by the prospect of financial gain from the Allocated Property. Regarding the alleged breach of Regulation 14(3) of the Timeshare Regulations (marketing as an investment), while a breach was possible, it would not have rendered the credit relationship unfair because the complainants' purchase decision was motivated by holiday rights rather than investment returns. The commission arrangement (5% of amount borrowed) was not so high as to render the relationship unfair, particularly given the complainants' lack of alternative means to finance their desired purchase. The ombudsman applied the principles from Hopcraft, Johnson and Wrench, finding that the factors present in that case (high commission, concealment, fiduciary duty breach) were not present here.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website