Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr R and Mrs M purchased a Fractional Club timeshare membership in October 2017 for £12,537 financed by Shawbrook Bank Limited. The membership included both holiday rights and a share in an allocated property's sale proceeds. In February 2022, they complained that the product was misrepresented as an investment in breach of the Timeshare Regulations, that the credit relationship was unfair under Section 140A, and that a commission paid by the lender to the supplier was undisclosed. The ombudsman found no actionable misrepresentation under Section 75, concluded that the consumers were not motivated by investment prospects but by holiday benefits, and determined that the 5% commission was too low to render the credit relationship unfair, particularly given the consumers would have proceeded with the purchase regardless of disclosure. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier under Section 75, as statements about investment appreciation were opinions rather than false statements of fact. Regarding Section 140A, the ombudsman concluded that even if the supplier breached Regulation 14(3) by marketing the product as an investment, Mr R and Mrs M were not motivated by the prospect of financial gain when making their purchase decision - their unhappiness related to the product's function as a holiday service. The commission of £626.85 (5% of borrowed amount) was not so high as to render the relationship unfair, particularly given the consumer wanted the product and had no alternative means to pay. The ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles but distinguished the case on the basis that the commission was low, there was no evidence of concealment of the commercial tie, and the consumer would have proceeded with the purchase regardless of disclosure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website