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; undisclosed commission; alleged breach of Regulation 14(3) of the Timeshare Regulations; alleged misrepresentation complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs K complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claims regarding a Fractional Club timeshare purchased in October 2017 for £14,003, financed by an £18,006 credit agreement. They alleged the supplier misrepresented the product as an investment, that the lender failed to conduct proper affordability checks, that the lender paid undisclosed commission to the supplier, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found no actionable misrepresentation, as statements about the property share were factually accurate and the evidence did not demonstrate that investment potential motivated the purchase. Although a possible breach of Regulation 14(3) of the Timeshare Regulations was acknowledged, the ombudsman concluded this would not have been material to the purchasing decision. The commission payment of £900.30 (5% of amount borrowed) was found to be low and properly disclosed within the credit terms. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches automatically created unfairness. The key reasoning was that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this would not have been material to Mr and Mrs K's purchasing decision, as the evidence did not demonstrate that the prospect of financial gain motivated their purchase. The ombudsman found the commission payment was low (5% of amount borrowed) and properly disclosed in the credit terms, distinguishing it from the high undisclosed commissions in Hopcraft/Johnson. The ombudsman concluded that Mr and Mrs K would have proceeded with the purchase regardless of any regulatory breaches or information failings.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website