Banks face £500m bill after landmark High Court ruling on timeshares
Banks face a bill of up to £500m after a court ruling paved the way for thousands of timeshare owners to sue their lenders.
Timeshares proved hugely popular in the 1980s and 1990s but they fell out of favour as the sector became synonymous with aggressive sales techniques.
The schemes gave investors the right to take a holiday in a property, often abroad, for a set number of days a year. In return they paid a lump sum upfront and annual maintenance fees.
Investors also had the option to part own a property in what was known as fractional timeshare schemes.
These investments typically involved expensive loans from banks working with timeshare firms.
But investors’ ability to repay the debt was not properly assessed, leaving many trapped in expensive contracts and properties they couldn’t offload.
Now the High Court has found that two lenders – Shawbrook and Barclays Premier Finance (formerly Clydesdale Financial Services) – breached consumer protection rules because investors did not fully understand the risks they were taking.
The verdict means up to 25,000 fractional timeshare owners could be eligible for compensation, according to one claims management firm that represents investors.
‘Some of our claimants will get six figures, ’ said Gary Smith of Praetorian Legal.
‘Based on the 1,000 claims we are currently processing, the average payout seems to be about £20,000.’