Not upheld: Motor finance commission (DCA) complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs A purchased a Fractional Club timeshare membership in January 2015 for £5,941 financed by Shawbrook Bank Limited. The membership included holiday rights and a share in an allocated property's net sale proceeds. In May 2018, they complained that the supplier had misrepresented the product as an investment and that the lender had participated in an unfair credit relationship. The lender rejected their claims. The ombudsman found no actionable misrepresentation, as the supplier made no false statements of existing fact about investment returns. While acknowledging a possible breach of the prohibition on marketing timeshares as investments, the ombudsman found this was not material because the evidence indicated Mr and Mrs A were primarily motivated by increased holiday rights rather than investment potential. The undisclosed commission of £594.10 (5.38% of credit charge) was not sufficiently high to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no factual and material misrepresentation by the supplier regarding investment potential, guaranteed end dates, exclusivity, or necessity of the purchase. While a breach of Regulation 14(3) (prohibition on marketing timeshares as investments) was possible, this was not determinative. Crucially, the evidence did not support that Mr and Mrs A's purchase was motivated by prospect of financial gain - they appeared primarily motivated by increased holiday rights. The commission payment of 5.38% of credit charge was not high enough to render the relationship unfair, particularly given the complainants wanted the product and had no alternative means to pay. Regulatory breaches do not automatically create unfairness under Section 140A; they must be considered in the round with regard to their actual impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website