Not upheld: Goods and services under S75 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs A purchased Fractional Club timeshare membership on 5 June 2013 using finance from Shawbrook Bank Limited. The membership included a share in an allocated property's net sale proceeds. On 29 July 2020, more than six years later, they complained to Shawbrook alleging: (1) misrepresentation by the Supplier regarding guaranteed end dates, exclusivity, and exit options; (2) breach of contract; and (3) an unfair credit relationship under Section 140A of the Consumer Credit Act 1974, including alleged breach of Regulation 14(3) of the Timeshare Regulations 2010 (prohibition on marketing timeshares as investments) and undisclosed commission. Shawbrook rejected all complaints. The ombudsman upheld none of the grounds: Section 75 misrepresentation claims were time-barred under the Limitation Act 1980; breach of contract claims lacked evidence; and the credit relationship was not unfair. Although the ombudsman acknowledged it was possible the Supplier marketed the product as an investment in breach of Regulation 14(3), this did not automatically create unfairness, and Mr and Mrs A's initial complaint account made no mention of investment motivation, casting doubt on later recollections. The commission of £444.80 (8.6% of total credit charge) was not high, and the Supplier did not owe a fiduciary duty.

The Ombudsman's reasoning

The ombudsman applied the Consumer Credit Act 1974 (as amended), the Timeshare Regulations 2010, and relevant case law including Plevin, Hopcraft/Johnson/Wrench, Carney, and Kerrigan. On Section 75 misrepresentation claims, the six-year limitation period under the Limitation Act 1980 had expired before Mr and Mrs A notified Shawbrook on 29 July 2020 (more than six years after 5 June 2013). Additionally, the ombudsman found insufficient evidence that the alleged misrepresentations (guaranteed end date, exclusive membership, only way to exit) were actually made. On breach of contract, there was insufficient evidence that Mr and Mrs A were no longer members or unable to use their membership as bargained. On Section 140A unfairness, the ombudsman considered: (1) the Supplier's commercial conduct and sales practices; (2) information provision and contractual documentation; (3) commission arrangements and disclosure; (4) evidence of what was said at point of sale; and (5) inherent probabilities. While the ombudsman acknowledged it was possible the Supplier breached Regulation 14(3) by marketing membership as an investment, this did not automatically render the relationship unfair. Crucially, Mr and Mrs A's initial complaint account made no mention of investment potential, and their later written recollections (provided nearly a decade after the sale) were viewed as potentially coloured by subsequent case law. The ombudsman found no material evidence that the prospect of financial gain from the property share was an important motivating factor in their purchasing decision. The commission of £444.80 (8.6% of total charge for credit) was not high compared to the 55% commission in the Johnson case, and Mr and Mrs A would have proceeded with the loan regardless of disclosure. The Supplier did not owe a fiduciary duty to Mr and Mrs A when acting as credit broker, so remedies for secret commission were unavailable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website