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

Decision detail

Summary

Mr and Mrs Z purchased Fractional Club timeshare membership in May 2017 for £11,549 financed by Shawbrook Bank Limited. They complained in May 2020 that the product was misrepresented 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 paid to the Supplier was undisclosed. The Lender rejected all complaints. The ombudsman found no actionable misrepresentation under Section 75, as the investment element was genuine and no specific sale date was guaranteed. Under Section 140A, the ombudsman held that even if Regulation 14(3) was breached, this was not material to the purchase decision because Mr and Mrs Z provided no credible evidence that investment returns motivated their purchase, despite multiple opportunities to provide direct testimony. The commission of 5% was found to be low and would not have deterred the purchase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically create unfairness (they do not). On the Section 75 misrepresentation claim, the ombudsman found no actionable misrepresentation: the investment element was real, no specific sale date was guaranteed, and insufficient evidence supported claims about exclusivity or being the only exit route. On Section 140A, the ombudsman found that even if Regulation 14(3) was breached (marketing as investment), this was not material to Mr and Mrs Z's decision to purchase, as they provided no credible evidence that investment returns motivated their purchase. The professional representative's assertions were generic, identical to other complaints, and unsupported by direct testimony from Mr and Mrs Z despite multiple opportunities to provide it. Regarding commission, at 5% of the loan amount, it was significantly lower than the 55% in the Johnson case and would not have deterred the purchase. The Supplier did not owe a fiduciary duty to Mr and Mrs Z when acting as credit broker, and regulatory guidance breaches do not automatically render relationships unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website