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

Decision detail

Summary

Mrs B complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by refusing to pay claims under Section 75 of the Consumer Credit Act 1974 relating to her purchase of Fractional Club timeshare membership in May 2019 for £13,197 financed by the lender. She alleged the supplier misrepresented the timeshare as an investment that could be sold at a profit, breached the contract by failing to deliver promised holiday availability and a guaranteed rental scheme, and marketed the timeshare in breach of Regulation 14(3) of the Timeshare Regulations. She also complained about undisclosed commission payments. The ombudsman found no actionable misrepresentation (as the share in the allocated property was genuinely an investment), no breach of contract (as availability was subject to demand as stated in the paperwork), and that even if the supplier breached Regulation 14(3), this did not render the credit relationship unfair because Mrs B's purchase was not motivated by the prospect of financial gain. The commission of 5% was not high enough to create unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that: (1) statements that Fractional Club membership was an investment offering potential profit were not false statements of fact, as the share in the allocated property was genuinely an investment; (2) Mrs B's own witness statement did not evidence she was promised a guaranteed £100 weekly return, but rather that she could receive £100 if family/friends holidayed at £149/week; (3) the prospect of financial gain was not an important motivating factor in her purchase decision, as she stated the main selling point was getting her money back, not making a profit; (4) even if the supplier breached Regulation 14(3) by marketing the timeshare as an investment, this would not have rendered the credit relationship unfair because it did not motivate her purchase; (5) the commission of 5% was not high enough to render the relationship unfair, particularly when compared to the 55% commission in the Johnson case; (6) the supplier did not owe Mrs B a fiduciary duty when acting as credit broker; (7) regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round with their actual impact on the consumer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website