Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 claim for misrepresentation; undisclosed commission; alleged breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs A purchased a Fractional Club timeshare membership for £15,600 in March 2018, financed by Shawbrook Bank Limited. They complained in November 2020 that the supplier had misrepresented the product and that the credit relationship was unfair, citing alleged breaches of section 75 and section 140A of the Consumer Credit Act 1974, as well as Regulation 14(3) of the Timeshare Regulations. The ombudsman found no actionable misrepresentation under section 75, as the supplier did not make false statements of existing fact about investment potential, guaranteed end dates, exclusivity, or release mechanisms. Regarding section 140A, the ombudsman concluded the credit relationship was not unfair because the lending was affordable, there was insufficient evidence of pressure, any breach of the Timeshare Regulations was not a motivating factor for the purchase, and the undisclosed commission of £780 (5% of the amount borrowed) was not disproportionate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier under section 75 of the CCA. While the Fractional Club membership included an investment element (share in property), the ombudsman was not persuaded that the supplier made false statements of existing fact regarding investment potential, guaranteed end dates, exclusivity, or being the only way to release from existing membership. Regarding section 140A, the ombudsman considered whether the credit relationship was unfair due to: (1) inadequate affordability checks (not satisfied the lending was unaffordable); (2) pressure from the supplier (insufficient evidence of impaired choice); (3) breach of Regulation 14(3) regarding marketing as investment (even if breached, not a motivating factor for the purchase); and (4) undisclosed commission (at 5% of amount borrowed, not disproportionate compared to the Supreme Court's Hopcraft decision where commission was 55%, and Mr and Mrs A would have proceeded with the purchase regardless). The ombudsman gave limited weight to Mr and Mrs A's recollection about investment representation, noting it was provided three years after the sale and shortly after the Shawbrook & BPF v FOS judgment, creating risk of recollection being influenced by that judgment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website