Not upheld: irresponsible lending, misrepresentation, unfair credit relationship, undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs S complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting her Section 75 claim for misrepresentation regarding the purchase of Fractional Club timeshare membership financed by a £10,620 credit agreement. Mrs S alleged the Supplier misrepresented the product as having a guaranteed end date, being the only way to exit existing membership, and being exclusive. The ombudsman found no actionable misrepresentation because the representations were not false statements of existing fact but honestly held opinions about future investment returns. Regarding the unfair credit relationship claim, the ombudsman concluded the relationship was not unfair because the lending was affordable, Mrs S was not pressured, and even if the Supplier breached the prohibition on marketing timeshares as investments, this was not a material motivating factor in her purchase decision. The ombudsman also found the undisclosed commission of £106.20 (1% of the loan) was not disproportionately high and would not have changed Mrs S's decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier under Section 75 of the CCA because the representations made (that Mrs S was buying part ownership of a property and would receive a share of net sale proceeds) were not false statements of existing fact but rather honestly held opinions about future investment potential. Regarding Section 140A, the ombudsman concluded the credit relationship was not unfair because: (1) the lending was affordable based on documented employment and earnings; (2) Mrs S was not pressured into the purchase; (3) even if the Supplier breached Regulation 14(3) by marketing the product as an investment, this was not a material motivating factor in Mrs S's decision to purchase, as evidenced by the letter of claim and statement not alleging investment motivation; (4) the commission paid (1% of amount borrowed) was not disproportionately high and would not have changed Mrs S's decision had it been disclosed; (5) the Supplier did not owe Mrs S a fiduciary duty; and (6) regulatory breaches do not automatically render a credit relationship unfair under Section 140A—they must be considered in the round with regard to their actual impact on the consumer's decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website