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

Decision detail

Summary

Mrs A and Mr A purchased Fractional Club timeshare membership in July 2017 for £11,164, financed by a £23,026 loan from Shawbrook Bank Limited. They complained in January 2022 that the product was misrepresented as an investment in breach of Regulation 14(3) of the Timeshare Regulations, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. They also alleged the lender failed to disclose a £1,151.30 commission paid to the supplier. The ombudsman found no actionable misrepresentation under Section 75, and while acknowledging a possible breach of the investment marketing prohibition, concluded this was not material to their purchasing decision. The ombudsman found the commission level (5% of loan) was not high enough to render the relationship unfair, and that the consumers would have proceeded with the loan regardless of disclosure. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation under Section 75 because statements about investment value were opinions rather than false statements of fact. Regarding Section 140A, while acknowledging the possibility that the supplier breached Regulation 14(3) by marketing the product as an investment, the ombudsman concluded this was not material to the consumers' purchasing decision. The evidence suggested pressure to upgrade was a driver, but not the prospect of financial gain. The ombudsman gave limited weight to the consumers' late testimony (6+ years after sale) due to timing concerns and risk of influence from the investigator's view and subsequent case law. Regarding commission, the ombudsman applied principles from Hopcraft, Johnson and Wrench, finding the 5% commission was not high enough to render the relationship unfair, especially given the consumers wanted the product and had no alternative means to pay. The ombudsman found no fiduciary duty owed by the supplier when acting as credit broker.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website