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

Decision detail

Summary

Mr and Mrs G purchased Fractional Club timeshare membership for £17,433 financed by Shawbrook Bank Limited on 8 July 2018. The membership included a share in an allocated property's net sale proceeds. They complained in July 2023 alleging misrepresentation (that membership was an investment that could be sold at profit and that the property would be sold), breach of contract (unavailable holidays), and that the credit relationship was unfair under Section 140A CCA, including due to undisclosed commission. The lender rejected all claims. The ombudsman found no actionable misrepresentation because statements about investment potential were not factually untrue and the sales representatives had no information indicating otherwise. Mr and Mrs G's own evidence showed holiday rights, not financial gain, motivated their purchase, so any regulatory breach was not causative. The 5% commission was not disproportionately high. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically created unfairness. Key findings: (1) statements that membership was an investment offering financial return were not factually untrue; (2) no evidence the sales representatives knew or should have known representations were false; (3) Mr and Mrs G's own statement indicated holiday rights, not financial gain, motivated their purchase; (4) the 5% commission was not disproportionately high compared to the 55% in Johnson v FirstRand; (5) even if Regulation 14(3) was breached, it was not material to their purchasing decision; (6) regulatory breaches do not automatically render credit relationships unfair under Section 140A; (7) causation matters—if consumers would have proceeded anyway, the breach cannot be attributed importance to unfairness.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website