Tandem Personal Loans Ltd · DRN-6232027

The complaint Mrs H’s complaint is, in essence, that Tandem Personal Loans Ltd1 (the ‘Lender’) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with her under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’). What happened Mrs H and Mr H were members of a timeshare provider (the ‘Supplier’) having purchased a trial membership from it. But they are complaining about the subsequent purchase of another product I’ll call the ‘Fractional Club’ – which they bought on 4 September 2018 (the ‘Time of Sale’). They entered into an agreement with the Supplier (the ‘Purchase Agreement’) to buy 1750 fractional points at a cost of £22,394. Fractional Club membership was asset backed – which meant it gave Mrs H and Mr H 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. Mrs H paid for their Fractional Club membership by making a cash payment and taking finance of £17,545 from the Lender (the ‘Credit Agreement’) for the balance of the payment. Mrs H using a professional representative (the ‘PR’) – wrote to the Lender on 26 January 2024 (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 issue a final response rejecting it on every ground. Mrs H then referred her complaint to the Financial Ombudsman Service. The complaint was assessed by an Investigator who, having considered the information on file, rejected the complaint on its merits. Mrs H disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision and it was passed to me. I issued a provisional decision (‘PD’) the findings from which are set out below. “I have considered all the available evidence and arguments to decide what is 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 140A of the CCA: did the Lender participate in an unfair credit relationship? 1 The loan to Mrs H was originally provided by Honeycomb Finance Ltd but was assigned to Tandem on 22 August 2022 and it therefore has responsibility for this complaint.

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Having considered the entirety of the credit relationship between Mrs H 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; 4. The commission arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements; 5. The inherent probabilities of the sale given its circumstances. I have then considered the impact of these on the fairness of the credit relationship between Mrs H and the Lender. The Supplier’s sales & marketing practices at the Time of Sale Mrs H’s complaint about the Lender being party to an unfair credit relationship was made for several reasons. The PR says that the Credit Agreement was arranged by an unauthorised credit broker, the upshot of which is to suggest that the Lender wasn’t permitted to enforce the Credit Agreement. However, it looks to me like Mrs H knew, amongst other things, how much she was borrowing and repaying each month, who she was borrowing from and that she was borrowing money to pay for Fractional Club membership. And as the lending doesn’t look like it was unaffordable for her, even if the Credit Agreement was arranged by a broker that didn’t have the necessary permission to do so (which I make no formal finding on), I can’t see why that led to Mrs H suffering a financial loss – such that I can say that the credit relationship in question was unfair on her as a result. And with that being the case, I’m not persuaded that it would be fair or reasonable to tell the Lender to compensate her, even if the loan wasn’t arranged properly. The PR also says that there was one or more unfair contract terms in the Purchase Agreement. But as I can’t see that any such terms were operated unfairly against Mrs H in practice, nor that any such terms led her to behave in a certain way to her detriment, I’m not persuaded that any of the terms governing Fractional Club membership are likely to have led to an unfairness that warrants a remedy. Overall, therefore, I don’t think that Mrs H’s credit relationship with the Lender was rendered unfair to her under Section 140A for any of the reasons set out above and referred to in the Letter of Complaint. But there is another reason, perhaps the main reason, why the PR says the credit relationship with the Lender was unfair to her. And that’s the suggestion that Fractional Club membership was marketed and sold to her and Mr H as an investment in breach of the 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 Mrs H’s and Mr H’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

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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 – saying, in summary, that Mrs H and Mr H were told by the Supplier that it was avital element of the offering that they could enjoy use and enjoy Fractional Club membership and then sell it at the end of the term for a financial return. 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 Mrs H and Mr H 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 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 Mrs H and Mr H 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 Mrs H and Mr H, 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 Mrs H and Mr H as an investment in breach of Regulation 14(3) as they have alleged. 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 go into below. 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. Would the credit relationship between the Lender and Mr M and Ms M have been rendered

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unfair to them had there been a breach of Regulation 14(3) of the Timeshare Regulations? 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 Mrs H 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 Mrs H and the Lender that was unfair to her and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led her to enter into the Purchase Agreement and the Credit Agreement is an important consideration. Mrs H has provided a signed witness statement dated 25 January 2024 in which she makes various references to Fractional Club membership being sold as an investment. But this has been provided after the judgment in 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) (Shawbrook v FOS) was handed down. It is fair to say that the PR and Mrs H were aware of that judgment at the time her witness statement was drafted given it was referred to specifically in the Letter of Complaint as was one of our services decisions – I want to make clear that each complaint is considered on its own facts and circumstances and although the PR argued in the Letter of Complaint that the facts and documents in the decision referred to were virtually identical to those in this complaint there are important differences. In the circumstances of this complaint I think there is a clear risk that what Mrs H has said has been coloured by the outcome of Shawbrook v FOS and I give what she said little weight because of this for the reasons I explain below. To my mind the emphasis Mrs H has put on Fractional Club membership being sold as an investment and this being the ‘main motivation’ behind the purchase she and Mr H made suggests to me that her statement was drafted very much with Shawbrook v FOS in mind. It is in my view of note that whilst she makes brief reference to being shown ‘stunning properties’ she doesn’t otherwise say much if anything about the other clear benefit of her membership – namely the holidays that she and Mr H expected to, and subsequently did, enjoy. Given this was what Fractional Club membership was for in the first place, the lack of any real comment on this makes what Mrs H has said about the reason behind her purchase very questionable in my view. Moreover, in a telephone discussion between the Supplier and Mrs H about possible resale or surrender of their membership she referred to not being able to take as much advantage of it as previously for health reasons and that she agreed they had had a few good holidays. And she then went on to say: “It was everything you told us it would be and we bought it for the quality of the accommodation which lived up to expectations.” I think this supports a conclusion that holidaying and the nature of the accommodation were very much behind the reason Mrs H and Mr H purchased and that they would have gone ahead with this regardless of whether, or not, they might make some gain or profit at the end of their membership.

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As Mrs H herself doesn’t persuade me that the purchase she and Mr H made 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 Mrs H’s and Mr H’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 whether, or not, there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationship between Mrs H and the Lender was unfair to her even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Time of Sale The PR says that Mrs H wasn’t given sufficient information about the ongoing costs of Fractional Club membership. But as I’ve already indicated, the case law on Section 140A makes it clear that it does not automatically follow that regulatory breaches create unfairness for the purposes of the unfair relationship provisions. The extent to which such mistakes render a credit relationship unfair must also be determined according to their impact on the complainant. I acknowledge that it is also possible that the Supplier did not give Mrs H sufficient information, in good time, on the various charges she and Mr H could have been subject to as Fractional Club members in order to satisfy the requirements of Regulation 12 of the 2010 Timeshare Regulations (which was concerned with the provision of ‘key information’). But even if that was the case, I cannot see that the ongoing costs of membership were applied unfairly in practice. And as neither Mrs H nor the PR have persuaded me that she would not have pressed ahead with the purchase had the finer details of the Fractional Club’s ongoing costs been disclosed by the Supplier in compliance with Regulation 12, I cannot see why any failings in that regard are likely to be material to the outcome of this complaint given its fact and circumstances. The PR also says that a payment of commission from the Lender to the Supplier at the Time of Sale should lead me to uphold this complaint because, simply put, information in relation to that payment went undisclosed at the Time of Sale. 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. 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:

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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 Mrs H in arguing that her credit relationship with the Lender was unfair to her for reasons relating to commission given the facts and circumstances of this complaint. 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 Mrs H, 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 Mrs H into a credit agreement that cost disproportionately more than it otherwise could have. 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, for the reasons set out below I don’t think any such failure is itself a reason to find the credit relationship in question unfair to Mrs H. 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 Mrs H but as the supplier of contractual rights she 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 her when arranging the Credit Agreement and thus a

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fiduciary duty. What’s more, in stark contrast to the facts of Mr Johnson’s case, as I understand it, the Lender didn’t pay the Supplier any commission at the Time of Sale. And with that being the case, even if there were information failings at that time and regulatory failings as a result (which I make no formal finding on), 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 Mrs H. Overall, therefore, I’m not 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 Mrs H.” In conclusion I wasn’t persuaded that the Lender was party to a credit relationship with Mrs H under the Credit Agreement that was unfair to her for the purposes of Section 140A of the CCA. And having taken everything into account, I could see no other reason why it would be fair or reasonable to direct the Lender to compensate her. I gave both parties the opportunity of responding to my PD and providing any further information they wanted me to consider. The Lender responded and said it agreed with the PD. The PR asked for some further time to consider the PD but subsequently confirmed that Mrs H had elected not to provide any further comments. The parties having had the opportunity of providing further information I am now finalising my decision. The legal and regulatory context In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is, in many ways. no different to that shared in several hundred published ombudsman decisions on very similar complaints – which can be found on the Financial Ombudsman Service’s website. And with that being the case, it is not necessary to set out that context in detail here. But I would add that the following regulatory rules/guidance are also relevant: The Consumer Credit Sourcebook (‘CONC’) – Found in the Financial Conduct Authority’s (the ‘FCA’) Handbook of Rules and Guidance Below are the most relevant provisions and/or guidance as they were at the relevant time: • CONC 3.7.3 [R] • CONC 4.5.3 [R] • CONC 4.5.2 [G] The FCA’s Principles The rules on consumer credit sit alongside the wider obligations of firms, such as the Principles for Businesses (‘PRIN’). Set out below are those that are most relevant to this complaint: • Principle 6

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• Principle 7 • Principle 8 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. Following the responses from both parties, I’ve considered the case afresh and having done so, given that neither party has provided any further information there is no reason for me to change the findings I made in my PD. Again, my role as an Ombudsman isn’t to address every single point which has been made to date, but to decide what is fair and reasonable in the circumstances of this complaint. If I haven’t commented on, or referred to, something that either party has said, this doesn’t mean I haven’t considered it. In summary my key findings are as follows: • 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. • 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 so it’s not necessary to make a formal finding on that issue for the purposes of this decision. • Mrs H’s statement was created after the decision in Shawbrook & v FOS and there is a clear risk that what she has said has been coloured by the outcome of that case. • Based on the evidence in this complaint I give what she said about purchasing Fractional Club membership little weight because of this for the following reasons: o The emphasis Mrs H has put on Fractional Club membership being sold as an investment and this being the ‘main motivation’ with no real mention of the holidaying, being the other main benefit of membership which she enjoyed, suggests to me her statement has been drafted with Shawbrook v FOS in mind. o In a discussion with the Supplier about possible resale or surrender of her Fractional Club membership Mrs H said: “It was everything you told us it would be and we bought it for the quality of the accommodation which lived up to expectations” which supports a conclusion that it was the nature of the accommodation for holidaying that was behind the decision to purchase and not membership being an investment. • The Lender didn’t pay the Supplier a commission in this case and the commission arrangements between the Lender and Supplier were unlikely to have led to a sufficiently extreme inequality of knowledge that this rendered the credit relationship unfair to Mrs H. My final decision I don’t uphold this complaint for the reasons set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs H to accept or reject my decision before 27 April 2026. Philip Gibbons Ombudsman

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