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

Decision detail

Summary

Mr B and Mrs B purchased Fractional Club timeshare membership on 28 June 2018 for £30,289, financed by a credit agreement with Shawbrook Bank Limited. The membership included a share in the net sale proceeds of an allocated property. More than six years later, in October 2024, they complained that Shawbrook acted unfairly by being party to an unfair credit relationship and by rejecting their section 75 claim for misrepresentation. The ombudsman found the section 75 claim was time-barred under the Limitation Act 1980. Regarding the section 140A unfair credit relationship claim, the ombudsman found that while the Supplier may have breached Regulation 14(3) by marketing the membership as an investment, this did not render the credit relationship unfair because the complainants were not motivated by investment returns. The ombudsman rejected arguments based on the objective financial reality of the product and the undisclosed commission arrangement (5% of amount borrowed), finding that the complainants would have proceeded with the purchase regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to assessing fairness under section 140A, considering the supplier's commercial conduct, information provision, evidence of what was said at the time of sale, inherent probabilities, and any existing unfairness. The ombudsman found that regulatory breaches do not automatically create unfairness and must be considered in the round. The key finding was that the complainants were not motivated by the prospect of financial gain from the investment element, as evidenced by their vague recollections, the generic nature of their statements, and their desire to surrender the membership within months of purchase. The ombudsman rejected arguments based on the 'objective financial reality' of the product, noting that people make purchasing decisions for various reasons and subjective value assessments are not determinative. The commission arrangement, while possibly undisclosed, was at a low level (5% of amount borrowed) and would not have deterred the complainants who wanted the membership and had no alternative means of payment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website