Shawbrook Bank Limited · DRN-6079021

The complaint Mr and Mrs P’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with them under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying claims under Section 75 of the CCA. What happened On 27 July 2014 Mr and Mrs P bought a trial timeshare membership from a timeshare provider (the ‘Supplier’). This cost them £3,995 which they paid for by taking finance from a different lender. While on a complimentary holiday given to them as part of their trial membership, Mr and Mrs P purchased full membership of a timeshare (the ‘Fractional Club’) from the Supplier on 18 February 2015 (the ‘Time of Sale’). They entered into an agreement with the Supplier to buy 900 fractional points, and after trading in their trial membership they ended up paying £15,800 (the ‘Purchase Agreement’) for their Fractional Club membership. Fractional Club membership was asset backed – which meant it gave Mr and Mrs P more than just holiday rights. It also included a share in the net sale proceeds of a property named on the Purchase Agreement (the ‘Allocated Property’) after their membership term ends. Mr and Mrs P paid for their Fractional Club membership by taking finance of £19,370 from the Lender (the ‘Credit Agreement’) which consolidated the outstanding balance of the loan taken to pay for their trial membership. Mr and Mrs P – using a professional representative (the ‘PR’) – wrote to the Lender on 19 December 2016 (the ‘Letter of Complaint’) to raise a number of different concerns. As those concerns haven’t changed since they were first raised, and as both sides are familiar with them, it isn’t necessary to repeat them in detail here beyond the summary above. The Lender dealt with Mr and Mrs P’s concerns as a complaint and issued its final response letter on 16 February 2016, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service. In its submission the PR also complained that the Lender had paid the Supplier commission for its brokering of the Credit Agreement, and there was a breach of the Supplier’s fiduciary duty to Mr and Mrs P which created an unfairness to the associated credit relationship. Mr and Mrs P’s complaint was assessed by an Investigator who, having considered the information on file, rejected it on its merits. Mr and Mrs P disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me.

-- 1 of 22 --

The provisional decision Having considered everything that had been submitted, I didn’t think this complaint ought to be upheld. I set out my initial thoughts in a provisional decision (the ‘PD’) and sent this to both sides, inviting them to submit any new evidence or arguments they wished me to consider. In the PD I said: “I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. And having done that, I do not currently think this complaint should be upheld. However, before I explain why, I want to make it clear that my role as an Ombudsman is not to address every single point that has been made to date. Instead, it is to decide what is fair and reasonable in the circumstances of this complaint. So, if I have not commented on, or referred to, something that either party has said, that does not mean I have not considered it. Section 75 of the CCA: the Supplier’s misrepresentations at the Time of Sale The CCA introduced a regime of connected lender liability under section 75 that affords consumers (“debtors”) a right of recourse against lenders that provide the finance for the acquisition of goods or services from third-party merchants (“suppliers”) in the event that there is an actionable misrepresentation and/or breach of contract by the supplier. Certain conditions must be met if the protection afforded to consumers is engaged, including, for instance, the cash price of the purchase and the nature of the arrangements between the parties involved in the transaction. The Lender doesn’t dispute that the relevant conditions are met. But for reasons I’ll come on to below, it isn’t necessary to make any formal findings on them here. It was said in the Letter of Complaint that Fractional Club membership had been misrepresented by the Supplier at the Time of Sale because Mr and Mrs P were told or led to believe by the Supplier that Fractional Club membership: (1) had a guaranteed end date when that was not true. (2) was the only way of releasing themselves from their existing membership when that was not true. As I understand it, the sale of the Allocated Property could be postponed in certain circumstances according to the Fractional Club Rules. But Mr and Mrs P say little to nothing to persuade me that they were given a guarantee by the Supplier that the Allocated Property would be sold on a specific date when such a promise would have been impossible to stand by given the inevitable uncertainty of selling property some way into the future. And point 2 seems inherently unlikely to have been said. I say this because the membership held by Mr and Mrs P prior to their purchase of the Fractional Club was a trial membership. This had a fixed duration of three years, so I see no reason why the Supplier would have said to Mr and Mrs P that the only way out of it would be to purchase Fractional Club. So, as there isn’t enough evidence on file to support the PR’s allegation that Fractional Club membership had been misrepresented for the reasons stated, I’m not persuaded that there were representations by the Supplier on the issues in question that constituted false statements of existing fact.

-- 2 of 22 --

So, while I recognise that Mr and Mrs P and the PR have concerns about the way in which Fractional Club membership was sold by the Supplier, when looking at the claim under Section 75 of the CCA, I can only consider whether there was a factual and material misrepresentation by the Supplier. For the reasons I’ve set out above, I’m not persuaded that there was. And that means that I don’t think that the Lender acted unreasonably or unfairly when it dealt with this particular Section 75 claim. Section 75 of the CCA: the Supplier’s Breach of Contract The PR says on Mr and Mrs P’s behalf that the Supplier has breached the Purchase Agreement because there is no guarantee that they will ever receive the net sales proceeds of the Allocated Property as they have been promised. However, this seems to suggest that the complaint is about something that may happen in the future, and is as yet uncertain. So, I’m not persuaded that this is a breach of contract as asserted by the PR. So, from the evidence I have seen, I do not think the Lender is liable to pay Mr and Mrs P any compensation for a breach of contract by the Supplier. And with that being the case, I do not think the Lender acted unfairly or unreasonably in relation to this aspect of the complaint either. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? I’ve already explained why I’m not persuaded that Fractional Club membership was actionably misrepresented by the Supplier at the Time of Sale or that the Purchase Agreement was breached. But there are other aspects of the sales process that, being the subject of dissatisfaction, I must explore with Section 140A in mind if I’m to consider this complaint in full – which is what I’ve done next. The PR says, for instance, that: 1. The right checks weren’t carried out before the Lender lent to Mr and Mrs P; 2. Mr and Mrs P were pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale; and 3. Fractional Club membership was marketed and sold as an investment in breach of a prohibition on doing so. However, having considered the entirety of the credit relationship between Mr and Mrs P and the Lender along with all of the circumstances of the complaint, I don’t think the credit relationship between them was likely to have been rendered unfair for the purposes of Section 140A. When coming to that conclusion, and in carrying out my analysis, I have looked at: 1. The standard of the Supplier’s commercial conduct – which includes its sales and marketing practices at the Time of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Time of Sale, including the contractual documentation and disclaimers made by the Supplier; 3. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; and 4. The inherent probabilities of the sale given its circumstances.

-- 3 of 22 --

I have then considered the impact of these on the fairness of the credit relationship between Mr and Mrs P and the Lender. The Supplier’s sales & marketing practices at the Time of Sale While the PR says that the right affordability checks weren’t carried out at the Time of Sale, even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied that the money lent to Mr and Mrs P was actually unaffordable, before also concluding that they lost out as a result, and then consider whether the credit relationship with the Lender was unfair to them for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr and Mrs P. I acknowledge that Mr and Mrs P may have felt weary after a sales process that went on for a long time. But they say little about what was said and/or done by the Supplier during their sales presentation that made them feel as if they had no choice but to purchase Fractional Club membership when they simply did not want to. They were also given a 14-day cooling off period and they have not provided a credible explanation for why they did not cancel their membership during that time. There is also evidence that they referred further family members to the Supplier, which I find hard to understand if the sales process they went through was so pressured. And with all of that being the case, there is insufficient evidence to demonstrate that Mr and Mrs P made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. Overall, therefore, I don’t think that Mr and Mrs P’s credit relationship with the Lender was rendered unfair to them under Section 140A for any of the reasons above. But there is another reason, perhaps the main reason, why the PR says the credit relationship with the Lender was unfair to them. And that’s the suggestion that Fractional Club membership was marketed and sold to them as an investment in breach of prohibition against selling timeshares in that way. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations The Lender does not dispute, and I am satisfied, that Mr and Mrs P’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. This is what the provision said at the Time of Sale: “A trader must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment if the proposed contract would be a regulated contract.” But the PR says that the Supplier did exactly that at the Time of Sale. The term “investment” is not defined in the Timeshare Regulations. But for the purposes of this provisional decision, and by reference to the decided authorities, an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit. A share in the Allocated Property clearly constituted an investment as it offered Mr and Mrs P the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But it is important to note at this stage that the fact that

-- 4 of 22 --

Fractional Club membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se. In other words, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. To conclude, therefore, that Fractional Club membership was marketed or sold to Mr and Mrs P as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to them as an investment, i.e. told them or led them to believe that Fractional Club membership offered them the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Time of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations. On the one hand, it is clear that the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Mr and Mrs P, the financial value of their share in the net sales proceeds of the Allocated Property along with the investment considerations, risks and rewards attached to them. On the other hand, I acknowledge that the Supplier’s sales process left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s equally possible that Fractional Club membership was marketed and sold to Mr and Mrs P as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Was the credit relationship between the Lender and the Consumer rendered unfair? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I now need to consider what impact that breach had on the fairness of the credit relationship between Mr and Mrs P and the Lender under the Credit Agreement and related Purchase Agreement, as the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. Indeed, it seems to me, that if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr and Mrs P and the Lender that was unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led them to enter into the Purchase Agreement and the Credit Agreement is an important consideration. But on my reading of the evidence before me, the prospect of a financial gain from Fractional Club membership was not an important and motivating factor when Mr and Mrs P decided to go ahead with their purchase.

-- 5 of 22 --

I say this having considered what Mr P has said about what he was told about the Fractional Club membership in a statement submitted to this Service by the PR. As regards the Time of Sale he said: “We agreed to have a meeting and then was told [sic] because the trial membership was high each month we would be better investing the money for my children's future, this was of course a full membership and after 19 years we would then own an apartment in Spain. We were told that this was a one time offer and with the property market doing so well we were investing for our future.” But this doesn’t appear to be any more than a description of how the Fractional Club was presented to them. It says nothing about their motivation to make the purchase, which I find surprising if the membership was bought as an investment as is now being suggested. That doesn’t mean they weren’t interested in a share in the Allocated Property. After all, that wouldn’t be surprising given the nature of the product at the centre of this complaint. But from the evidence I’ve seen, including their reservation history, I think the holidays the membership could provide was the reason Mr and Mrs P made the purchase. They had, after all, bought a trial membership from the Supplier, so it seems they were interested in holidays, and specifically the type of holidays they could get as members. And the sales and contact notes made by the Supplier seem to support this. For example, the notes made following contact a few days after the purchase show: And then further:

-- 6 of 22 --

And then in the following month: So, as Mr and Mrs P themselves don’t persuade me that their purchase was motivated by their share in the Allocated Property and the possibility of a profit, I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision they ultimately made. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr and Mrs P’s decision to purchase Fractional Club membership at the Time of Sale was motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests they would have pressed ahead with their purchase for the holidays it would provide, whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationship between Mr and Mrs P and the Lender was unfair to them even if the Supplier had breached Regulation 14(3).” The responses to the provisional decision The Lender accepted my provisional decision and provided details of the amount of commission it had paid to the Lender when the Credit Agreement was arranged. The PR disagreed with my overall conclusion, and asked for the evidence that had been provided by the Lender that I had relied upon, which was sent to it. I then wrote to both sides setting out my initial thoughts regarding the commission arrangements between the Lender and the Supplier at the Time of Sale. I said: “As both sides already know, the Supreme Court handed down an important judgment on 1 August 2025 in a series of cases concerned with the issue of commission: Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd [2025] UKSC 33 (‘Hopcraft, Johnson and Wrench’). The Supreme Court ruled that, in each of the three cases, the commission payments made to car dealers by lenders were legal, as claims for the tort of bribery, or the dishonest assistance of a breach of fiduciary duty, had to be predicated on the car dealer owing a fiduciary duty to the consumer, which the car dealers did not owe. A “disinterested duty”, as described in Wood v Commercial First Business Ltd & ors and Business Mortgage Finance 4 plc v Pengelly [2021] EWCA Civ 471, is not enough.

-- 7 of 22 --

However, the Supreme Court held that the credit relationship between the lender and Mr Johnson was unfair under Section 140A of the CCA because of the commission paid by the lender to the car dealer. The main reasons for coming to that conclusion included, amongst other things, the following factors: 1. The size of the commission (as a percentage of the total charge for credit). In Mr Johnson’s case it was 55%. This was “so high” and “a powerful indication that the relationship…was unfair” (see paragraph 327); 2. The failure to disclose the commission; and 3. The concealment of the commercial tie between the car dealer and the lender. The Supreme Court also confirmed that the following factors, in what was a non-exhaustive list, will normally be relevant when assessing whether a credit relationship was/is unfair under Section 140A of the CCA: 1. The size of the commission as a proportion of the charge for credit; 2. The way in which commission is calculated (a discretionary commission arrangement, for example, may lead to higher interest rates); 3. The characteristics of the consumer; 4. The extent of any disclosure and the manner of that disclosure (which, insofar as Section 56 of the CCA is engaged, includes any disclosure by a supplier when acting as a broker); and 5. Compliance with the regulatory rules. From my reading of the Supreme Court’s judgment in Hopcraft, Johnson and Wrench, it sets out principles which apply to credit brokers other than car dealer–credit brokers. So, when considering allegations of undisclosed payments of commission like the one in this complaint, Hopcraft, Johnson and Wrench is relevant law that I’m required to consider under Rule 3.6.4 of the Financial Conduct Authority’s Dispute Resolution Rules (‘DISP’). But I don’t think Hopcraft, Johnson and Wrench assists [Mr and Mrs P] in arguing that their credit relationship with the Lender was unfair to them for reasons relating to commission given the facts and circumstances of this complaint. As the Supreme Court said in paragraph 326 of its judgment in Hopcraft, Johnson and Wrench, it’s not possible to simply apply the reasoning of the Supreme Court in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 (‘Plevin’) to this complaint (as the PR does) when it’s concerned with a product and marketplace that were very different to those in Plevin. What’s more, [Mr and Mrs P] were provided with information as to the price of Fractional Club membership and the cost of the Credit Agreement (interest rate, fees, APR and monthly repayments). So, they were at least in a position from which they could understand the cost of the Credit Agreement and compare it with other options that might have been available at the Time of Sale. I haven’t seen anything to suggest that the Lender and Supplier were tied to one another contractually or commercially in a way that wasn’t properly disclosed to [Mr and Mrs P], nor have I seen anything that persuades me that the commission arrangement between them gave the Supplier a choice over the interest rate that led [Mr and Mrs P] into a credit agreement that cost disproportionately more than it otherwise could have.

-- 8 of 22 --

I acknowledge that it’s possible that the Lender and the Supplier failed to follow the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them. But as I’ve said before, the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. And with that being the case, it isn’t necessary to make a formal finding on that because, even if the Lender and the Supplier failed to follow the relevant regulatory guidance at the Time of Sale, it is for the reasons set out below that I don’t currently think any such failure is itself a reason to find the credit relationship in question unfair to [Mr and Mrs P]. In stark contrast to the facts of Mr Johnson’s case, the amount of commission paid by the Lender to the Supplier for arranging the Credit Agreement that [Mr and Mrs P] entered into wasn’t high. At £1,937, it was only 9.96% of the amount borrowed and even less than that (5.46%) as a proportion of the charge for credit. So, had they known at the Time of Sale that the Supplier was going to be paid a flat rate of commission at that level, I’m not currently persuaded that they either wouldn’t have understood that or would have otherwise questioned the size of the payment at that time. After all, [Mr and Mrs P] wanted Fractional Club membership and had no obvious means of their own to pay for it. And at such a low level, the impact of commission on the cost of the credit they needed for a timeshare they wanted doesn’t strike me as disproportionate. So, I think they would still have taken out the loan to fund their purchase at the Time of Sale had the amount of commission been disclosed. What’s more, based on what I’ve seen so far, the Supplier’s role as a credit broker wasn’t a separate service and distinct from its role as the seller of timeshares. It was simply a means to an end in the Supplier’s overall pursuit of a successful timeshare sale. I can’t see that the Supplier gave an undertaking – either expressly or impliedly – to put to one side its commercial interests in pursuit of that goal when arranging the Credit Agreement. And as it wasn’t acting as an agent of [Mr and Mrs P] but as the supplier of contractual rights they obtained under the Purchase Agreement, the transaction doesn’t strike me as one with features that suggest the Supplier had an obligation of ‘loyalty’ to them when arranging the Credit Agreement and thus a fiduciary duty. Overall, therefore, I’m not currently persuaded that the commission arrangements between the Supplier and the Lender were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to [Mr and Mrs P]. Section 140A: Conclusion Given all of the factors I’ve looked at in this part of my decision, and having taken all of them into account, I’m not persuaded that the credit relationship between [Mr and Mrs P] and the Lender under the Credit Agreement and related Purchase Agreement was unfair to them. And as things currently stand, I don’t think it would be fair or reasonable that I uphold this complaint on that basis. Commission: The Alternative Grounds of Complaint While I’ve found that [Mr and Mrs P]’s credit relationship with the Lender wasn’t unfair to them for reasons relating to the commission arrangements between it and the Supplier, two of the grounds on which I came to that conclusion also constitute separate and freestanding complaints to [Mr and Mrs P]’s complaint about an unfair credit relationship. So, for completeness, I’ve considered those grounds on that basis here.

-- 9 of 22 --

The first ground relates to whether the Lender is liable for the dishonest assistance of a breach of fiduciary duty by the Supplier because it took a payment of commission from the Lender without telling [Mr and Mrs P] (i.e., secretly). And the second relates to the Lender’s compliance with the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them. However, for the reasons I set out above, I’m not persuaded that the Supplier – when acting as credit broker – owed [Mr and Mrs P] a fiduciary duty. So, the remedies that might be available at law in relation to the payment of secret commission aren’t, in my view, available to them. And while it’s possible that the Lender failed to follow the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between it and the Supplier, I don’t think any such failure on the Lender’s part is itself a reason to uphold this complaint because, for the reasons I also set out above, I think they would still have taken out the loan to fund their purchase at the Time of Sale had there been more adequate disclosure of the commission arrangements that applied at that time. My provisional decision - commission In conclusion, given the facts and circumstances of this complaint, I am not persuaded that the Lender was party to a credit relationship with [Mr and Mrs P] under the Credit Agreement and related Purchase Agreement that was unfair to them for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate them.” The further responses The Lender did not respond to my thoughts on the commission arrangements. But the PR did. It provided significant submissions at first but it went on to withdraw them and replace them with more concise submissions – which, while primarily concerned with the suggestion that Mr and Mrs P’s Fractional Club membership had been marketed and sold as an investment in contravention of a prohibition on selling timeshares in that way, it repeated its allegations that the Fractional Club membership had been misrepresented on the basis that Mr and Mrs P were told by the Supplier at the Time of Sale that: (1) They were buying part ownership of a physical property; (2) Fractional Club membership was an investment; (3) The Allocated Property would be sold; and (4) They would receive a share of the net sales proceeds of sale when the Allocated Property is sold, which was guaranteed to be £19,000. The PR also repeated its concerns about the pressure Mr and Mrs P were put under by the Supplier at the Time of Sale, the Lender’s decision to lend being irresponsible and the payment of commission to the Supplier by the Lender – albeit with a focus on the Supreme Court’s judgment in Hopcraft, Johnson and Wrench. To support its assertions that this complaint ought to be upheld, the PR submitted copies of two questionnaires it had asked Mr P to complete. I will discuss these in more detail later in this decision, and I will refer to them as the ‘Section 75 Client Questionnaire’ and the ‘Section 140A Client Questionnaire’. These were both completed and signed by Mr P on 31 August 2017. It is unclear why Mr P was asked to complete these at that time, as this was some eight months after the Letter of Complaint was sent to the Lender and six months after the complaint was referred to this Service. It was also more than one year after the PR has suggested that Mr P wrote his statement.

-- 10 of 22 --

As a result, the complaint was passed back to me for further thought and my Final Decision. The PR has also drawn my attention to earlier guidance from this Service that it was unnecessary to submit anything other than a complaint form at the outset. It seems this point is made to explain why the statement was not submitted to this Service until much later in the complaints process (17 November 2023). But I want to make it clear that I am not saying I am unable to place weight on what Mr P has said in his statement due to when it was submitted – I am saying that I do not find what he says in it is persuasive. The Legal and Regulatory Context The legal and regulatory context that I think is relevant to this complaint has been shared in several hundred published decisions on very similar complaints, as well as in previous correspondence with the parties. So, there’s no need for me to set this out again in detail here. I simply remind the parties that our rules1 say that in considering what is fair and reasonable in all the circumstances of the complaint, I will take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (when appropriate), what I consider to have been good industry practice at the relevant time. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. And having done that afresh, I’m not persuaded to depart from my provisional decision for reasons I’ll now explain. But before I do, I want to make it clear that I recognise that this complaint, when originally made, was wide ranging and made on a number of different grounds - including: (1) Misrepresentations by the Supplier at the Time of Sale giving Mr and Mrs P a claim against the Lender under Section 75 of the CCA, which the Lender failed to accept and pay. (2) A breach of contract by the Supplier giving Mr and Mrs P a claim against the Lender under Section 75 of the CCA, which the Lender failed to accept and pay. (3) The Lender being party to an unfair credit relationship under the Credit Agreement and related Purchase Agreement for the purposes of Section 140A of the CCA. However, as the PR’s concise response to my provisional decision and further correspondence relates, in the main, to (1) and (3), as I haven’t been provided with new arguments and/or evidence to consider in relation to (2), I see no reason to change or add to my conclusions (as set out in the extract of my provisional decision above) in relation to the complaint about a breach of contract. Indeed, as I said in my provisional decision, my role as an Ombudsman is to decide what’s fair and reasonable in the circumstances of this complaint – rather than address every single point that’s been made. And with that being the case, while I have read all of the PR’s submissions in full, if I have not commented on, or referred to, something that either party has said, that does not mean I have not considered it. What’s more, it is important to make the point that, in contrast to what might happen in court, neither side to this complaint has a burden of proof that it must discharge. After all, the 1 Specifically Rule 3.6.4 in the Dispute Resolution Rules found in the Financial Conduct Authority’s Handbook for Rules and Guidance.

-- 11 of 22 --

jurisdiction under which I’m deciding this complaint is inquisitorial rather than adversarial – which means that my findings are made on the balance of probabilities, in light of the evidence and/or arguments from both sides. So, while the PR argues in response to my provisional decision that, under Section 140B(9) of the CCA, it is for the Lender to prove that its credit relationship with Mr and Mrs P wasn’t unfair simply because they allege that it was, that fails to understand that the Financial Ombudsman Service deals with complaints rather than causes of action. And, in any event, to suggest that unsubstantiated allegations of fact must be disproved by the Lender if the credit relationship isn’t to be deemed unfair also oversimplifies if not misunderstands the legal position. As HHJ David Cooke said in paragraph 26 of his judgment on Promontoria (Henrico) Ltd v. Gurcharn Samra [2019] EWHC 2327 (Ch): “…the onus is on [the creditor] to show, to the normal civil standard, that the relationship is not unfair because of any of the reasons set out in s 140A(1)(a)-(c). Whether it is so unfair is a matter for the court's overall judgment having regard to all the relevant circumstances and matters, including matters relating (i.e. personal) to the creditor and debtor. This onus on the claimant does not however mean, in my judgement…that where [the borrower alleging an unfair credit relationship] makes allegations of fact on which he relies he does not have the burden of proving them to the normal civil standard. The onus placed on the creditor is as to the relationship between it and the debtor, and does not have the effect that factual allegations made by Mr Samra must be accepted unless they can be positively disproved by contrary evidence.”2 Section 75 of the CCA: the Supplier’s misrepresentations at the Time of Sale It was argued by the PR, when this complaint was first made, that the Supplier misrepresented Fractional Club membership at the Time of Sale. The reasons for this aspect of this complaint were addressed in my provisional decision. But in in response to my provisional decision, the PR continues to argue that the Fractional Club membership was misrepresented by the Supplier in that Mr and Mrs P were told: (1) They were buying part ownership of a physical property; (2) Fractional Club membership was an investment; (3) The Allocated Property would be sold; and (4) They would receive a share of the net sales proceeds of sale when the Allocated Property is sold, which was guaranteed to be £19,000. The PR takes that view because it says the Lender hasn’t provided any evidence that the Allocated Property exists or that it will sell in the future (making it unlikely that Mr and Mrs P will receive anything from their share in it). The law relating to misrepresentation is a combination of the common law, equity and statute – though, as I understand it, the Misrepresentation Act 1967 didn’t alter the rules as to what constitutes an effective misrepresentation. Summarising the relevant pages in Chitty on Contracts, a material and actionable misrepresentation is an untrue statement of existing fact or law made by one party (or his agent for the purposes of passing on the representation, acting within the scope of his authority) to another party that induced that party to enter into a contract. However, a mere statement of opinion, rather than fact or law, which proves to be unfounded, isn’t a misrepresentation unless the opinion amounts to a statement of fact and it 2 As approved by the Supreme Court in Smith v. The Royal Bank of Scotland plc [2023] UKSC 34 – see paragraph 40.

-- 12 of 22 --

can be proved that the person who gave it did not hold it or could not reasonably have held it. It also needs to be shown that the other party understood and relied on the implied factual misrepresentation. Telling prospective members that they were investing their money because they were buying a fraction or share of one of the Supplier’s properties was not untrue – nor was it untrue to tell prospective members that they would receive some money when the allocated property is sold. And I’ve seen nothing which makes me think the share(s) in the Allocated property are not being held in trust by independent trustees, and that the trustees will not put the Allocated Property up for sale at the end of the membership term as set out in the contractual documentation. And Mr and Mrs P’s share in the Allocated Property clearly constituted an investment as it offered them the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But as the PR knows, while the term “investment” is not defined in the Timeshare Regulations, it was agreed by the parties in Shawbrook & BPF v FOS3 that, by reference to the decided authorities, “an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit” (see paragraph 56). Yet, contrary to what the PR says, none of the contractual paperwork made any promises that a profit might be made. As I said in my provisional decision, the Supplier’s training material left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s possible that Fractional Club membership was marketed and sold to Mr and Mrs P as an investment orally. The PR has submitted copies of two questionnaires that Mr P completed in relation to his complaint against the Lender, and it says the answers Mr P has given in these support that the above misrepresentations were made. So, I have gone on to consider these questionnaires with this in mind. Firstly, for some context, as set out at the start of this decision, Mr and Mrs P first bought a trial membership. This cost £3,995 and was funded by a loan from a different finance provider. Alongside the complaint I am considering here, the PR also submitted a complaint on Mr and Mrs P’s behalf to this other Lender regarding their trial membership purchase. The reason I think this is important is because I am unable to say with any degree of confidence whether the answers given in the questionnaire relate to their purchase of the trial membership, or their purchase of the Fractional Club. So, I am unable to place much, if any weight on the answers given when considering the merits of Mr and Mrs P’s complaint that I am considering here. I’ll explain. 3 R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin)

-- 13 of 22 --

At the header of the Section 75 Client Questionnaire are two references. One relates to the PR, and the other relates to the credit agreement being complained about. This reference relates to the provider who financed the trial membership purchase. And the first question was: This suggests that this was Mr and Mrs P’s first purchase – i.e. the trial membership. But the questionnaire goes on to say the membership was bought in Tenerife, which does suggest the answers relate to the Fractional Club purchase. And it goes on: The length of the membership of the Fractional Club is 19 years, but Mr P was 38 when he bought the trial membership.

-- 14 of 22 --

The questionnaire then goes on, where relevant: Here Mr P has suggested that they were told there would be a guaranteed profit of £19,000 at the end of the membership, so it seems likely he is talking about the Fractional Club. But this defined amount of profit is not mentioned in his written statement at all. And his statement was apparently written closer to the Time of Sale, where I think it likely that his memories of the events would have been clearer. I find it hard to understand why, if Mr P remembered the Supplier making a specific guarantee that he and Mrs P would make a profit of £19,000 he would not have written this in his full statement. The questionnaire concludes as follows: But from the evidence in the contemporaneous documentation, I can see that Mr and Mrs P signed to say they were aware of having a 14-day cooling off period. And I do not understand why Mr P has said he has never used the product if it is the Fractional Club he is referring to here. I have seen evidence from the Supplier that Mr and Mrs P have used their

-- 15 of 22 --

Fractional Club membership (referred to as FPOC 2 in the table below) on a number of occasions: I will now consider the second questionnaire, the Section 140A Client Questionnaire. This again is headed with a reference which relates to the trial membership and not the Fractional Club. And it has the following questions and answers: Again, these do not assist me in confirming which loan the answers relate to – it suggests Mr P was 38 when the lending was agreed, but it says the loan was paid off by taking funds

-- 16 of 22 --

against his mortgage. But this does not accord with what Mr P says in his statement, which as I’ve said, was apparently written over a year before. In this Mr P says: “So we signed and again were unable to book any hotels because they were always booked up. The monthly costs really effected our day to day life and after a year we borrowed money from family to pay off the £19000.” This neither accords with Mr P’s answer about how the balance of the Credit Agreement was cleared, nor with the record of their usage of the membership. Given the confusion about which loan the answers actually relate to, and the apparent inconsistencies with what other documents show, I feel unable to place sufficient weight on what Mr P has said in these questionnaires to persuade me that the alleged misrepresentations were made by the Supplier at the Time of Sale. I’m not persuaded, therefore, by the allegations of misrepresentation from the PR. And with that being the case, they aren’t reasons to uphold this complaint and to direct the Lender to compensate Mr and Mrs P. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? I’ve already explained why, in light of the PR’s allegations of misrepresentation, I’m not persuaded that Fractional Club membership was actionably misrepresented by the Supplier at the Time of Sale. And it is for those reasons that I don’t think the credit relationship between Mr and Mrs P and the Lender was rendered unfair to them on the basis that membership had been misrepresented. However, there are, of course, other reasons for why the PR argues that the credit relationship in question was unfair. But having reconsidered the entirety of that relationship along with everything that has now been said and/or provided by both sides, I still don’t think the credit relationship between Mr and Mrs P and the Lender was likely to have been rendered unfair to them for the purposes of Section 140A. When coming to that conclusion, I have looked again at: 1. The standard of the Supplier’s commercial conduct – which includes its sales and marketing practices at the Time of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Time of Sale, including the contractual documentation and disclaimers made by the Supplier; 3. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; and 4. The inherent probabilities of the sale given its circumstances. I have also reconsidered any commercial (including commission) arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements. The PR continues to argue that: 1. The Lender’s decision to lend to Mr and Mrs P was, in essence, irresponsible; and 2. Mr and Mrs P were pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale. However, as neither the PR nor Mr and Mrs P have submitted any new evidence to further the arguments that the Lending was irresponsible, it is for the same reasons I gave in my

-- 17 of 22 --

provisional decision that I don’t think this rendered their credit relationship with the Lender unfair to them for the purposes of Section 140A. The PR has reaffirmed its assertion that Mr and Mrs P were put under undue pressure at the Time of Sale. And it has presented what Mr P has said in the questionnaires to support this assertion. The following sections are relevant to this complaint point: But there is no colour or context to what Mr P has said here. He has not explained how they were prevented from leaving when they did not want to stay. And in any case, I have considerable doubts that the sales presentation being referred to here by Mr P was the Time of Sale. I say this because this is not mentioned in his statement at all when he is talking about their purchase of the Fractional Club. But it is mentioned when he is describing the sale of the trial membership: “After the hour we said we were leaving and got up to leave only to be pressured by at least 3 sales guys and the manager who said ‘You came here and we provided you lunch, taxi and drinks along with our time and now you want to leave.....sorry but you cannot until we have finished’. We felt very threatened and pressured at this time and my wife got very upset. We said no to the timeshare they offered but after I think was 4 hours in the heat they said we have a one time offer of a trial membership which gives you access to all their hotels and no obligation to sign for any longer.” The statement then goes on to say they bought the trial membership. So, for all of the reasons I set out in the PD, and because I do not think the answers Mr P has given in the questionnaires above supports it, I am not persuaded that Mr and Mrs P made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. But I’ll turn now to what continues to be the main reason for the PR’s assertion that the credit relationship in question was unfair.

-- 18 of 22 --

The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations As I said in my provisional decision, there is competing evidence in this complaint as to whether the Fractional Club membership was marketed and/or sold by the Supplier at the Time of Sale as an investment in breach of Regulation 14(3) of the Timeshare Regulations. I acknowledged that it was possible that Fractional Club membership was marketed and sold to Mr and Mrs P as an investment in breach of Regulation 14(3). A view I still hold. But I also thought and still think that it isn’t necessary to make a formal finding on that particular issue for the purposes of my determination on this complaint because a breach of Regulation 14(3) by the Supplier is not itself determinative of the outcome in this complaint unless the impact of such a breach suggested otherwise. The PR disagrees with that and cites the judgment of Mrs Justice Collins Rice in Shawbrook & BPF v FOS in support – saying that she found that the selling of a timeshare as an investment (i.e. in a breach of Regulation 14(3) of the Timeshare Regulations) was, itself, sufficient to create an unfair credit relationship. However, on my reading of Shawbrook & BPF v FOS, Mrs Justice Collins Rice didn’t find that a breach of Regulation14(3) of the Timeshare Regulations was "causative of the legal relations entered into". She recognised that such a breach was "conduct that knocks away the central consumer protection safeguard", but she went on to say that it was the ombudsmen behind the two reviewed decisions who found that such a breach was, given the facts and circumstances of the relevant complaints, causative of the consumers in question purchasing their timeshares and taking out loans to do so. What’s more, the Supreme Court’s judgment in Plevin makes it clear that regulatory breaches do not automatically create unfairness for the purposes of Section 140A. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. I am also mindful of what HHJ Waksman QC (as he then was) and HHJ Worster had to say in Carney v NM Rothschild & Sons Ltd [2018] EWHC 958 (‘Carney’) and Kerrigan v Elevate Credit International Ltd [2020] EWHC 2169 (Comm) (‘Kerrigan’) (respectively) on causation. In Carney, HHJ Waksman QC said the following in paragraph 51: “[…] In cases of wrong advice and misrepresentation, it would be odd if any relief could be considered if they did not have at least some material impact on the debtor when deciding whether or not to enter the agreement. […] in a case like the one before me, if in fact the debtors would have entered into the agreement in any event, this must surely count against a finding of unfair relationship under s140A. […]” And in Kerrigan, HHJ Worster said this in paragraphs 213 and 214: “[…] The terms of section 140A(1) CCA do not impose a requirement of “causation” in the sense that the debtor must show that a breach caused a loss for an award of substantial damages to be made. The focus is on the unfairness of the relationship, and the court's approach to the granting of relief is informed by that, rather than by a demonstration that a particular act caused a particular loss. Section 140A(1) provides only that the court may make an order if it determines that the relationship is unfair to the debtor. […] […] There is a link between (i) the failings of the creditor which lead to the unfairness in the relationship, (ii) the unfairness itself, and (iii) the relief. It is not to be analysed in the sort of

-- 19 of 22 --

linear terms which arise when considering causation proper. The court is to have regard to all the relevant circumstances when determining whether the relationship is unfair, and the same sort of approach applies when considering what relief is required to remedy that unfairness. […]” So, it still seems to me that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr and Mrs P and the Lender that was unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led them to enter into the Purchase Agreement and the Credit Agreement is an important consideration. Indeed, doing that accords with common sense, for if events would have unfolded in the same way whether or not such a pre-contractual breach had occurred, it would be difficult to attribute any particular importance to the breach when deciding whether an unfair debtor- creditor relationship ensued, or whether a remedy is appropriate. If there had been a breach of Regulation 14(3), would it have rendered the credit relationship between Mr and Mrs P and the Lender unfair to them? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I have considered (as I did in my provisional decision) what impact that breach (if there was one) had on the fairness of the credit relationship between Mr and Mrs P and the Lender under the Credit Agreement and related Purchase Agreement. And on my re-reading of the evidence before me, I’m still not persuaded that the prospect of a financial gain from Fractional Club membership was an important and motivating factor when Mr and Mrs P decided to go ahead with their purchase, such that they would have made an entirely different purchasing decision had there not been a breach of Regulation 14(3). I say that having considered everything the PR has said. As I’ve said above, I have considered what Mr P has said in the questionnaires he has completed. But for the same reasons as I set out in relation to the allegation of misrepresentation, I do not feel able to place the required weight on what Mr P has said here to be persuaded that this aspect of the complaint ought to be upheld either. There are too many inconsistencies in what has been recorded, and too many doubts that the answers given actually relate to the Time of Sale and the Credit Agreement being considered here. The PR has set out that the overall cost of the Fractional Club membership, when including the cost of the credit and the annual maintenance fees over its duration, was actually in excess of £54,000. And it says this means that a single annual holiday using the membership actually costs Mr and Mrs P over £2,800 plus travel expenses. The PR asserts that the sheer disproportionality of the expenditure proves that Mr and Mrs P were induced into the contract by the promise of an eventual financial return from the sale of the Allocated Property, and thus the credit relationship is unfair under Section 140A of the CCA. But I don’t agree with the PR here. The actual true cost of the membership was the initial outlay plus the interest they paid over the nine months the loan was running before the balance was cleared, not over the full length of the agreement. So, the additional expenditure incurred by Mr and Mrs P when they bought the Fractional Club was significantly less than has been set out by the PR. But in any case, it seems likely that Mr and Mrs P were aware, at the Time of Sale, of the cost of the Fractional Club membership, the interest they were being charged, as well as that they needed to pay maintenance fees every year and the cost of those fees in the first year. And I am not saying that Mr and Mrs P were not interested in their share of the Allocated

-- 20 of 22 --

Property. I am saying that there isn’t any persuasive evidence that the membership was bought as an investment. The PR has pointed to what it said in the Letter of Complaint as evidence that the investment element of the membership has been consistently positioned as causing an unfairness to Mr and Mrs P’s credit relationship with the Lender. I appreciate that the Letter of Complaint was probably prepared by the PR following a conversation or conversations with Mr and Mrs P. However, a letter of complaint (or claim) is not evidence – especially when, as here, it contains bare allegations or a mere summary of the consumer’s allegations. And in any case, when it comes to setting out what happened at the Time of Sale, I have some doubts as to the accuracy of what was said in the Letter of Complaint. For example, it says the following: “Our Clients later discovered that the agreement was one in perpetuity and wanted to rid themselves of the product. They attended a further meeting with the Timeshare Owner to discuss the same. The Timeshare Owner advised Our Clients that they had a product which would suit them. The new product, known as Fractional Points was marketed to Our Clients as an Investment, which could be sold after 19 years, whereupon Our Clients would get at least £15k back. This was the only way that Our Clients would be able to exit the Timeshare Owner early, but it would allow them to recover the monies they had already paid out.” The agreement alluded to in the first paragraph can only be the trial membership, as that was the only agreement between the Supplier and Mr and Mrs P in place at the time. And the trial membership was not unending – it had a defined term of three years, so I am not sure how it could be considered to be in perpetuity or be described as such. And it goes on to suggest that Mr and Mrs P were guaranteed to receive at least £15,000 from the sale of the Allocated Property. This is a figure that has not been mentioned anywhere else – no figure is given in Mr P’s written statement, and it’s a figure of £19,000 that is set out in the questionnaire. So, although the Letter of Complaint does suggest there was a complaint about the investment element of the membership, there is little consistency in the detail of that allegation. On balance, therefore, I am not persuaded by the arguments from the PR following the PD and see no reason to change my provisional outcome on this aspect of Mr and Mrs P’s complaint. So, for all of the reasons I’ve set out above and in my provisional decision, I don’t think the credit relationship between Mr and Mrs P and the Lender was unfair to them even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Time of Sale As I’ve already said, I set out my thoughts in relation to the implications of the Supreme Court’s judgment in Hopcraft, Johnson and Wrench for this complaint on 3 December 2025. I remain satisfied that the Lender has provided me with sufficient information to reach a conclusion about its commercial (including commission) arrangements with the Supplier. I’ve seen nothing in this case that leads me to think that the information in question is inaccurate. The PR has pointed to the answers given in the questionnaire by Mr P, and says these suggest there was a commercial tie between the Lender and the Supplier. As I’ve said, for all the reasons previously given, I do not feel able to place much, if any weight on the answers Mr P has given in these questionnaires. But in any event, the Lender has provided this Service with an unredacted copy of the commercial agreement it had with the Supplier at the Time of Sale. And having read it, I cannot see that there was any

-- 21 of 22 --

contractual tie between the Lender and the Supplier, such that the Supplier was required to place its customer’s loans with the Lender. And I have seen numerous examples of when loans were arranged by the Supplier with other lenders, and indeed, as has been said, the loan Mr and Mrs P took out for the trial membership was with a different lender. So, while I recognise that the PR might disagree with the thoughts I shared on 3 December 2025, it hasn’t offered any evidence and/or arguments that lead me to think that (1) the factors referenced by the Supreme Court have a bearing on the outcome of this complaint given its circumstances or (2) there are any other reasons why the commercial (including commission) arrangements between the Supplier and the Lender rendered the credit relationship between the latter and Mr and Mrs P under the Credit Agreement and related Purchase Agreement unfair for the purposes of Section 140A. Conclusion Having adopted my provisional findings, and having reconsidered the facts and circumstances of this complaint, I still don’t think the Lender acted unfairly or unreasonably when it dealt with Mr and Mrs P’s Section 75 claims. And I’m still not persuaded that the Lender was party to a credit relationship with Mr and Mrs P that was unfair to them for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable for me to direct the Lender to compensate Mr and Mrs P. My final decision I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr P and Mrs P to accept or reject my decision before 27 April 2026. Chris Riggs Ombudsman

-- 22 of 22 --