Upheld: Irresponsible lending complaint against Shawbrook Bank Limited
Financial Ombudsman decision DRN-6445240 of 2026-06-23T00:00:00+00:00. Irresponsible lending complaint against Shawbrook Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6445240 |
|---|---|
| Decision date | 2026-06-23T00:00:00+00:00 |
| Firm | Shawbrook Bank Limited |
| Product | Other regulated product |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | The Lender must: (1) Refund all repayments made by Mr and Mrs R under the Credit Agreement, including sums paid to settle the debt, and cancel any outstanding balance; (2) Refund the difference between Fractional Club annual management charges and what European Collection annual management charges would have been; (3) Deduct the value of promotional giveaways used and the market value of holidays taken using Fractional Points (proportionately, only for additional points beyond European Collection entitlement); (4) Add simple interest at 8% per annum to each net repayment from the date made until settlement; (5) Remove any adverse information recorded on Mr and Mrs R's credit files in connection with the Credit Agreement reported within six years of the decision; (6) If Fractional Club membership is still in place, indemnify Mr and Mrs R against all ongoing liabilities, provided they assign their Fractional Points to the Lender or hold them on trust for the Lender. |
Summary
Mr and Mrs R purchased Fractional Club timeshare membership for £16,960 on 10 October 2013, financed through a credit agreement with Shawbrook Bank Limited. The product included holiday rights and a share in the net sale proceeds of an Allocated Property. Mr and Mrs R complained that the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing and selling the membership as an investment, and that the Lender participated in an unfair credit relationship. The ombudsman upheld the complaint, finding that despite contractual disclaimers, the Supplier likely represented the product as offering financial gain, which was material to Mr and Mrs R's decision to purchase. The ombudsman ordered the Lender to refund all credit repayments with interest, refund excess management charges, remove adverse credit file information, and indemnify Mr and Mrs R against ongoing liabilities.
The Ombudsman's reasoning
The ombudsman found that although the Supplier included disclaimers stating the product was not an investment, the prohibition in Regulation 14(3) is not confined to using the word 'investment'. The regulation captures the promotion of investment features to persuade consumers to purchase, including leading them to expect financial gain. The ombudsman considered the inherent probabilities of the sale: Mr and Mrs R, as existing members, made a substantial purchase (£16,960) for only a marginal increase in holiday rights (2,000 additional points), suggesting the Allocated Property and prospect of profit were the primary motivations. The ombudsman applied the test from Smith v Secretary of State for Transport regarding assessment of oral evidence, finding a consistent and believable core to Mr and Mrs R's recollection that the product was sold as an investment, despite potential inconsistencies in other details. The ombudsman concluded that the Supplier's breach of Regulation 14(3) was material to Mr and Mrs R's purchasing decision and rendered the credit relationship unfair under Section 140A of the Consumer Credit Act 1974.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Shawbrook Bank Limited, all decisions | 2,533 | 17% |
| Irresponsible lending, all decisions | 30,675 | 37% |
| Other regulated product, all decisions | 47,449 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website