Not upheld: unfair credit relationships 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 payments complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs D purchased fractional timeshare points on two occasions, financed by Shawbrook Bank Limited, and later complained that the lender was party to unfair credit relationships and failed to uphold Section 75 claims for misrepresentation and breach of contract by the supplier. The complainants alleged the supplier marketed the timeshare as an investment in breach of regulatory rules, applied high-pressure sales tactics, and failed to disclose commission arrangements. The ombudsman found no actionable misrepresentation regarding investment potential, as the product genuinely included a share in allocated properties. Although a breach of Regulation 14(3) was possible, the ombudsman concluded Mr and Mrs D's purchases were not primarily motivated by investment returns but by holiday needs and pressure, meaning any regulatory breach would not have altered their decisions. The modest commission (4.63% of credit charge) did not render the relationships unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have marketed Fractional Club membership as an investment in breach of Regulation 14(3), this did not automatically render the credit relationships unfair under Section 140A. The key finding was that Mr and Mrs D's purchases were not primarily motivated by the prospect of financial gain from the allocated properties. Although their witness statement claimed the supplier emphasized investment returns, the ombudsman found their recollections lacked detail about investment specifics and contradicted their own statements that they 'caved in' to pressure and needed safe holiday accommodation for their disabled children. The ombudsman concluded that even if regulatory breaches occurred, they would not have altered Mr and Mrs D's purchasing decisions. The commission arrangement (4.63% of charge for credit) was not high enough to render the relationship unfair, particularly given the Supreme Court's guidance in Hopcraft, Johnson and Wrench that size of commission is a key factor. No actionable misrepresentation was found regarding the investment nature of the product or the likelihood of profit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website