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

Decision detail

Summary

Mr and Mrs D complained to Shawbrook Bank Limited about their purchase of a Fractional Club timeshare upgrade financed by a £8,986 loan, alleging misrepresentation, breach of contract, unfair credit relationship, and undisclosed commission. The upgrade increased their fractional points from 1,200 to 1,700 and included a share in an allocated property's net sale proceeds. The ombudsman found that the statement the upgrade was an investment was not untrue, there was insufficient evidence of breach of contract regarding holiday availability, and although the upgrade may have been marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, Mr and Mrs D's purchase was not motivated by investment potential given their significant use of the membership for holidays and their failure to cancel during the cooling-off period. The commission of £449.30 (5% of amount borrowed) was found to be low and not disproportionate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the Fractional Club upgrade included an investment element (share in allocated property), the mere existence of an investment element did not breach Regulation 14(3) of the Timeshare Regulations, which prohibits marketing or selling timeshare contracts 'as an investment'. Although there was competing evidence about whether the upgrade was marketed as an investment, the ombudsman was not persuaded that Mr and Mrs D's purchase decision was motivated by the prospect of financial gain. The ombudsman noted that Mr and Mrs D made significant use of the membership for holidays, their statement focused entirely on investment potential without mentioning holiday benefits (which were intrinsic to membership), and they did not cancel during the 14-day cooling-off period. The commission of £449.30 (5% of amount borrowed) was found to be low and not disproportionate, and the ombudsman was not persuaded that Mr and Mrs D would have made a different purchasing decision had the commission been disclosed. The ombudsman applied the principles from Hopcraft, Johnson and Wrench but found them distinguishable on the facts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website