Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs M purchased fractional timeshare points in two transactions (January 2013 and September 2013) financed by credit agreements from Shawbrook Bank Limited. They complained in September 2019 that the Lender acted unfairly by rejecting Section 75 claims and by being party to unfair credit relationships under Section 140A of the Consumer Credit Act 1974. The ombudsman found that the first Section 75 claim was time-barred (made more than six years after purchase), the second lacked sufficient evidence of misrepresentation or breach, and that although the Supplier may have breached Regulation 14(3) by marketing the product as an investment, this was not material to the consumers' purchasing decisions, which were primarily motivated by holiday usage. The low commission amounts (5.4-5.6% of charge for credit) would not have changed their decision to purchase had they been disclosed. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. For Section 75 claims: the Time of Sale 1 claim was time-barred under the Limitation Act 1980 (made more than six years after the cause of action accrued), making it fair for the Lender to reject it; the Time of Sale 2 claim lacked sufficient evidence of actionable misrepresentation or breach of contract. For Section 140A unfairness: although the Supplier may have breached Regulation 14(3) by marketing the product as an investment, regulatory breaches do not automatically create unfairness. The critical question was whether any breach was material to Mr and Mrs M's purchasing decisions. The ombudsman found, based on Mr and Mrs M's own testimony, that their primary motivation was holiday usage, not investment returns. The commission amounts were low (5.4-5.6% of charge for credit), well below the 55% threshold in Johnson, and disclosure would not have changed their decision to purchase. The Supplier did not owe a fiduciary duty to Mr and Mrs M when acting as credit broker, so secret commission remedies were unavailable. No unfairness was found in the credit relationships.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website