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

Decision detail

Summary

Mr B and Ms D complained to Shawbrook Bank Limited about their 2013 purchase of Fractional Club timeshare membership financed by a credit agreement, alleging misrepresentation by the supplier and an unfair credit relationship. They claimed the membership was wrongly marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that affordability checks were inadequate, that they were pressured into the purchase, and that commission was undisclosed. The ombudsman found no actionable misrepresentation because Mr B and Ms D's own witness statement did not articulate that profit motivation was important to their decision. Although acknowledging a possible breach of Regulation 14(3), the ombudsman found this was not determinative of unfairness under section 140A because: the consumers would have proceeded anyway; regulatory breaches do not automatically create unfairness; the commission was low (5.42% of credit charge); and there was no evidence of fiduciary duty. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A, examining the supplier's commercial conduct, information provision, evidence of what was said at sale, and inherent probabilities. While acknowledging a possible breach of Regulation 14(3), the ombudsman found this was not determinative because: (1) Mr B and Ms D's purchase was not motivated by prospect of financial gain (their witness statement did not articulate profit motivation); (2) regulatory breaches do not automatically create unfairness under section 140A; (3) the impact of any breach must be considered in the round; (4) causation is relevant - if consumers would have entered the agreement anyway, this counts against unfairness; (5) the commission was low (5.42% of charge for credit) compared to the 55% in Johnson's case; (6) there was no evidence of fiduciary duty owed by supplier as credit broker; (7) affordability was not demonstrated to be an issue; (8) pressure allegations lacked credible evidence; (9) information failings, even if established, would not have changed their purchasing decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website