Banks face a £500m bill after landmark High Court ruling on timeshare
Banks are facing a bill of up to £500 million after a court ruling cleared the way for thousands of timeshare owners to sue their lenders.
Timeshares proved extremely popular in the 1980s and 1990s, but fell out of favor as the industry became synonymous with aggressive sales techniques.
The schemes gave investors the right to take a holiday in a property, often abroad, for a certain number of days per year. In return, they paid a lump sum and annual maintenance fee upfront.
Investors also had the option of partially owning a property in so-called fractional timeshare arrangements.
These investments usually involved expensive loans from banks that worked with timeshare companies.
But investors’ ability to repay the debt was not properly assessed, leaving many trapped in expensive contracts and properties they could not repay.
Now the Supreme Court has found that two lenders – Shawbrook and Barclays Premier Finance (formerly Clydesdale Financial Services) – violated consumer protection rules because investors did not fully understand the risks they were taking.
The verdict means that up to 25,000 fractional timeshare owners could be eligible for compensation, according to a claims management firm that represents investors.
“Some of our plaintiffs are getting six figures,” said Praetorian Legal’s Gary Smith.
“Based on the 1,000 claims we are currently processing, the average payout appears to be around £20,000.”