Not upheld: Irresponsible lending complaint against Shawbrook Bank Limited

Decision detail

Summary

Ms B and Mr K complained that Shawbrook Bank Limited failed to take responsibility for alleged mis-selling of timeshares by the Supplier and lent to them irresponsibly. They purchased three timeshares between August 2017 and October 2018, all financed by loans from the Lender. Ms B complained in February 2024, alleging the Supplier falsely claimed exclusivity, failed to disclose the timeshare nature of products, used pushy sales tactics, and the Lender failed to assess their ability to afford the loans given their existing debts and maintenance fees. The ombudsman found the August 2017 purchase complaint was time-barred under both the Limitation Act 1980 and FOS jurisdiction rules. For the August and October 2018 purchases, the ombudsman found no evidence of specific misrepresentations about exclusivity in contemporaneous documents, that failure to mention timeshare definition did not constitute actionable misrepresentation, that pressure selling was not established given the 14-day cooling-off period and repeat purchases, and that the loans were sustainably affordable at origination despite Ms B's subsequent income decline due to fostering placement breakdown. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a two-stage analysis using Section 75 CCA (connected lender liability for misrepresentation/breach of contract) and Section 140A CCA (unfair credit relationships). For the August 2017 purchase, the complaint was time-barred under both the Limitation Act 1980 (six-year period) and DISP rules (six years from event or three years from awareness of cause to complain). For the August and October 2018 purchases, the ombudsman found: (1) no specific false statements about exclusivity in contemporaneous documents; (2) failure to mention timeshare definition does not constitute misrepresentation; (3) Ms B's ability to exercise choice was not significantly impaired by pressure, evidenced by her 14-day cooling-off period and subsequent purchases; (4) while the Lender's checks were not proportionate in intention (focused only on income, not expenditure), the bank statements received provided sufficient information to make a responsible lending decision; (5) the loan was sustainably affordable at the time, with approximately £6,168 monthly income supporting £558 monthly repayments plus other obligations, with approximately £3,259 remaining for living expenses; (6) the subsequent change in circumstances due to fostering placement breakdown was an unfortunate event, not evidence of irresponsible lending at origination; (7) Ms B's signed declaration that she was confident repayments would be met was sufficient for the Lender to reasonably conclude income would not change unsustainably.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website