posted 4th November 2023
Shawbrook warns timeshare compensation may hit £25m.
Ben Martin
Friday August 11 2023, 12.01am, The Times
Original Article
A High Court ruling in May that found Shawbrook and other banks broke timeshare regulations and consumer protection laws with loans they had provided for so-called fractional timeshare schemes. Shawbrook is bracing to pay as much as £25.4 million in compensation to customers who were mis-sold timeshare loans for holiday homes by the bank.
The lender disclosed in its half-year results yesterday that it had set aside £11.4 million for potential redress and that its remediation costs could rise by a further £14 million depending on other timeshare claims it may face. It booked the provision after a High Court ruling in May that found Shawbrook and other banks broke timeshare regulations and consumer protection laws with loans they had provided for so-called fractional timeshare schemes, which enable part-ownership of a property. This is because the timeshare products were sold as investments rather than just holiday homes.
Shawbrook has advanced about £200 million in loans for timeshare financing in total, but the complaints it faces relate only to a proportion of this. It said yesterday that the £11.4 million provision reflected its “best estimate of probable outflows associated with timeshare claims”. It also expects to “substantially recover” any compensation it pays through insurance.
The provision weighed on Shawbrook’s pre-tax profits, which nevertheless rose 27 per cent year-on-year to £135.1 million in the six months to the end of June. Like other lenders across the industry, it has been lifted by rising interest rates.
Shawbrook listed on the London market in 2015 but was taken private two years later by BC Partners and Pollen Street Capital for £868 million. It has emerged as a suitor for the Co-operative Bank and was rumoured last week to have made a merger proposal.
