Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr D and Mrs D purchased a Fractional Club timeshare membership for £4,500 in May 2014, financed through a credit agreement with Shawbrook Bank Limited. In March 2018, they complained that the supplier had misrepresented the product, that the lender had failed to conduct proper affordability checks, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman examined whether the membership had been marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, whether there were misrepresentations or breaches of contract, and whether the lender's commission arrangement (£45 or 1% of borrowing) rendered the relationship unfair. The ombudsman found that while there was competing evidence about marketing practices, the complainants' own documents (letter of claim and complaint form) did not allege that profit motivation was a factor in their purchase decision, and their later statement was insufficiently detailed and inconsistent with earlier positions. The ombudsman concluded that even if regulatory breaches had occurred, they would not have materially influenced the purchase decision, and therefore the credit relationship was not unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-factor test under Section 140A of the Consumer Credit Act 1974, examining the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and commission arrangements. The ombudsman found that while there was competing evidence about whether the membership was marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, this was not determinative. The key finding was that Mr D and Mrs D's purchase was not motivated by the prospect of financial gain, as evidenced by the absence of such allegations in their letter of claim and complaint form, and the lack of persuasive detail in their later statement. The ombudsman concluded that even if there had been a breach of Regulation 14(3), the credit relationship would not have been rendered unfair because the breach did not materially influence their decision to purchase. The commission of £45 (1% of borrowing) was found to be small and not disproportionate, and the ombudsman found no evidence of a fiduciary duty owed by the supplier to the consumers.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website