Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs A complained that Shawbrook Bank Limited acted unfairly by being party to unfair credit relationships and by refusing to pay claims under Section 75 of the Consumer Credit Act 1974 relating to three timeshare purchases financed between 2017 and 2020. They alleged the supplier misrepresented fractional club membership as an investment that could be sold at a profit, that allocated properties would be sold with financial returns, and that the lender failed to disclose commission payments. The ombudsman found no actionable misrepresentation or breach of contract, and determined the credit relationships were not unfair because Mr and Mrs A's purchases were motivated by feeling obliged after accepting free holidays rather than by investment prospects. Although the ombudsman acknowledged competing evidence that the supplier may have breached regulations prohibiting marketing timeshares as investments, this was not determinative given the complainants' actual motivations. The modest commission arrangement (5%) would not have changed their purchasing decisions. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to assess fairness under Section 140A of the Consumer Credit Act 1974, considering the supplier's commercial conduct, information provision, evidence of what was said at the times of sale, inherent probabilities, and any existing unfairness. While acknowledging competing evidence that the supplier may have breached Regulation 14(3) by marketing fractional club membership as an investment, the ombudsman found this was not determinative because Mr and Mrs A's purchases were not motivated by the prospect of financial gain. The ombudsman found their primary motivation was feeling obliged to purchase after accepting free holidays. The commission arrangement, while possibly undisclosed, was modest (5%) and would not have deterred the complainants given their desire for the product. No actionable misrepresentation or breach of contract by the supplier was established. The ombudsman applied principles from the Supreme Court's Hopcraft, Johnson and Wrench judgment on commission disclosure but distinguished the facts as less extreme than that case.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website