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

Decision detail

Summary

Mr O and Mrs O purchased Fractional Club timeshare membership in June 2012 for £15,999, financed by a credit agreement with Shawbrook Bank Limited. Over 12 years later, in November 2024, they claimed the lender was liable under Section 75 of the Consumer Credit Act 1974 for alleged misrepresentation by the supplier and that the credit relationship was unfair under Section 140A. The ombudsman found the Section 75 claim time-barred under the six-year limitation period. Regarding the Section 140A claim, the ombudsman acknowledged competing evidence about whether the timeshare was marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, but concluded that even if such a breach occurred, it did not render the credit relationship unfair because the consumers failed to demonstrate that the prospect of financial gain was an important motivating factor in their purchase decision. The ombudsman also rejected arguments about irresponsible lending, high-pressure sales, and undisclosed commission, finding the lending was affordable, the commission was modest at 5.6% of the charge for credit, and the consumers had adequate information and a 14-day cooling-off period. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches automatically create unfairness (they do not). The key reasoning was: (1) the Section 75 misrepresentation claim was time-barred under the Limitation Act 1980 (six-year limit from June 2012, claim made November 2024); (2) even if the supplier breached Regulation 14(3) by marketing the timeshare as an investment, this was not causative of the purchase decision because Mr O and Mrs O did not demonstrate that the prospect of financial gain was an important and motivating factor; (3) the lending was affordable based on their income; (4) they had a 14-day cooling-off period and did not cancel; (5) the commission of 5.6% of the charge for credit was not high and would not have deterred them; (6) they were provided with information about the price, interest rate, fees, APR and monthly repayments; (7) the supplier did not owe a fiduciary duty to the consumers; (8) regulatory breaches must be considered in the round and their impact on the complainant assessed, not applied mechanically.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website