Not upheld: Motor finance commission (DCA) complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs R complained that Shawbrook Bank Limited acted unfairly by financing three timeshare purchases and rejecting their Section 75 misrepresentation claims and by participating in unfair credit relationships under Section 140A of the Consumer Credit Act 1974. They alleged the Supplier misrepresented Fractional Club membership as having a guaranteed end date and being the only exit route, marketed it as an investment in breach of Timeshare Regulations, applied pressure during sales, and that the Lender failed to disclose commission payments. The ombudsman found no actionable misrepresentation due to insufficient evidence, and concluded that even if regulatory breaches occurred, the credit relationships were not unfair because Mr and Mrs R's motivation was capital return rather than profit, the commission amounts were low, and they would have proceeded regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier under Section 75 because Mr and Mrs R provided insufficient evidence that they were promised a guaranteed end date or that Fractional Club was the only exit route. Regarding Section 140A unfairness claims, the ombudsman concluded that even if the Supplier breached Regulation 14(3) by marketing Fractional Club as an investment, this did not render the credit relationships unfair because Mr and Mrs R's primary motivation was return of capital, not profit. The ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles on commission and found the commission amounts were low (0-8%), the Supplier was not acting as an agent for Mr and Mrs R but as a seller, and Mr and Mrs R would have proceeded with the loans regardless of commission disclosure. The ombudsman rejected arguments about pressure, exorbitant holiday costs, and alleged exploitation as either subjective or unsupported by evidence.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website