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

Decision detail

Summary

Mr and Mrs A complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claim regarding alleged misrepresentations by the Supplier of a Fractional Club timeshare upgrade purchased in August 2017 for £20,280 financed by loan. The ombudsman found the Section 75 claim time-barred as it was raised in April 2024, more than six years after the Time of Sale. Regarding the Section 140A unfair relationship claim, the ombudsman found that even if the Supplier breached Regulation 14(3) by marketing the product as an investment, this did not render the credit relationship unfair because Mr and Mrs A's purchase was not primarily motivated by investment prospects, as evidenced by their failure to mention the investment element when later seeking to cancel and their focus on holiday benefits. The ombudsman also found the undisclosed commission of £1,014 (5% of the loan) was not disproportionately high and would not have changed their decision to borrow. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the Section 75 claim was time-barred under the Limitation Act as more than six years had passed since the Time of Sale. Regarding Section 140A, the ombudsman concluded that even if the Supplier breached Regulation 14(3) by marketing the product as an investment, this did not render the credit relationship unfair because: (1) Mr and Mrs A's motivation for purchase was not primarily the investment element, as evidenced by their failure to mention the investment when later seeking to cancel and their focus on holiday benefits; (2) the commission of 5% was not disproportionately high compared to the Supreme Court's guidance; (3) the Supplier did not owe a fiduciary duty to Mr and Mrs A; (4) Mr and Mrs A had sufficient information about the cost of the credit and could have compared alternatives; and (5) regulatory breaches do not automatically render a credit relationship unfair under Section 140A.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website