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

Decision detail

Summary

Mr and Mrs L purchased two Fractional Club memberships financed by Shawbrook Bank Limited in 2013 and 2014, later complaining that the supplier misrepresented the product as an investment and that the lender participated in an unfair credit relationship. The ombudsman found that while the supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, this breach was not material to Mr and Mrs L's purchasing decision, which was primarily motivated by holiday accommodation for their family. The ombudsman rejected claims of actionable misrepresentation and breach of contract, and found the commission payments (10% and 9.91% of amounts borrowed) were modest and did not render the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering that regulatory breaches do not automatically create unfairness. The key finding was that Mr and Mrs L's purchase was motivated primarily by holiday accommodation benefits for their family, not by the prospect of investment returns or profit from the allocated property. Even if the supplier breached Regulation 14(3) by marketing the membership as an investment, this breach was not material to their purchasing decision. The commission amounts (10% and 9.91% of amounts borrowed) were relatively modest compared to the 55% commission in the Supreme Court's Johnson case, and Mr and Mrs L had information about the cost of credit and could compare options. The ombudsman found no fiduciary duty owed by the supplier when acting as credit broker, and no evidence of concealment of the commercial relationship.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website