Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs W complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by refusing to pay claims under Section 75 of the Consumer Credit Act 1974 relating to their purchase of Fractional Club timeshare membership financed by a £17,165 credit agreement. They alleged the supplier misrepresented the product, breached contract, concealed information, made fraudulent misrepresentations, and that the lender paid undisclosed commission. The ombudsman found no actionable misrepresentation, no breach of contract, and that the credit relationship was not unfair under Section 140A because Mr and Mrs W's purchase was not motivated by investment prospects but by holiday benefits. The low commission (5% of borrowed amount) and lack of alternative funding options meant the relationship was not unfair even if regulatory breaches occurred. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches automatically create unfairness (they do not). The key finding was that Mr and Mrs W's purchase was not motivated by the prospect of financial gain from the allocated property, but rather by the holiday benefits and comparison packages presented. Even if the supplier breached Regulation 14(3) by marketing the product as an investment, this would not have been material to their purchasing decision. The commission of £858.25 (5% of borrowed amount) was not high enough to render the relationship unfair, particularly given that Mr and Mrs W had no alternative means to fund their desired purchase. The ombudsman found no actionable misrepresentation, no breach of contract, and no unfair credit relationship.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website