Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs O complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by declining Section 75 claims for misrepresentation and breach of contract relating to their purchase of Fractional Club timeshare memberships financed through two credit agreements in 2019. The ombudsman found no actionable misrepresentation because statements about the product being an investment with a share in property sale proceeds were factually true, and Mr and Mrs O's own testimony indicated they were motivated by holiday benefits rather than investment returns. The breach of contract claim failed due to lack of specific evidence of promised but undelivered holidays. On the unfair credit relationship claim, the ombudsman found that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this was not material to the purchasing decision and the low commission amounts (approximately 5% of amounts borrowed) did not render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier because: (1) statements that the product was an investment and would provide a share in property sale proceeds were factually true; (2) Mr and Mrs O's own testimony indicated they were motivated by holiday prospects rather than investment returns; (3) no specific false statements of existing fact were identified in the sales paperwork. Regarding breach of contract, the complaint was too vague and lacked specific examples of promised but undelivered holidays. On the unfair credit relationship claim under Section 140A, the ombudsman found that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this was not material to Mr and Mrs O's purchasing decision because the evidence showed they were primarily motivated by holiday benefits, not financial gain. The commission amounts were low (approximately 5% of amounts borrowed) and comparable to the Supreme Court's guidance in Hopcraft, Johnson and Wrench, which distinguished this case from the high-commission scenario in that judgment. The ombudsman applied the principle from case law that regulatory breaches do not automatically render credit relationships unfair; the impact must be considered holistically, and causation between any breach and the decision to enter the agreement is relevant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website