Shawbrook Bank Limited · DRN-4641998

The complaint Mr B and Mrs F’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 Mr B and Mrs F were members of a timeshare provider (the ‘Supplier’) – having purchased a number of products from it over time. But the product at the centre of this complaint is their membership of a timeshare that I’ll call the ‘Fractional Club’ – which they bought on 22 April 2014 (the ‘Time of Sale’). They entered into an agreement with the Supplier to buy 4,340 fractional points at a cost of £50,071 (the ‘Purchase Agreement’). However, after trading in an existing timeshare, they paid £4,531. Fractional Club membership was asset backed – which meant it gave Mr B and Mrs F 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 B and Mrs F paid for their Fractional Club membership by taking finance of £4,531 from the Lender (the ‘Credit Agreement’). Mr B and Mrs F – using a professional representative (the ‘PR’) – wrote to the Lender on 5 March 2021 (the ‘Letter of Complaint’) to raise a number of different concerns. As both sides are familiar with the concerns raised, it isn’t necessary to repeat them in detail here beyond the summary above. The Lender dealt with Mr B and Mrs F’s concerns as a complaint and issued its final response letter on 26 April 2021, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service. I issued a provisional decision on 3 March 2026 setting out why I didn’t plan to uphold Mr B and Mrs F’s complaint. 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

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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. For instance, Section 75 does not apply to a claim so far as it relates to any single item to which the Supplier has attached a cash price not exceeding £100 or more than £30,000. According to a ‘Pricing Summary’ document produced by the Supplier the cash price of Fractional Club membership before Mr B and Mrs F traded in an existing timeshare was £50,071. So, Section 75 did not apply to their claim for misrepresentation. And although Section 75A of the CCA affords additional protection in some cases where the cash price exceeds £30,000 it only does so for breach of contract claims. However, even if the cash price attached to Fractional Club membership was the post trade in price (which I don’t think it was) there is another reason why I don’t think the Lender unreasonably declined to meet Mr B and Mrs F’s claim. As a general rule, creditors can reasonably reject Section 75 claims that they are first informed about after the claim has become time-barred under the Limitation Act 1980 (the ‘LA’) as it wouldn’t be fair to expect creditors to look into such claims so long after the liability arose and after a limitation defence would be available in court. So, it is relevant to consider whether Mr B and Mrs F’s Section 75 claim for misrepresentation was time-barred under the LA before they put it to the Lender. As I mentioned above, a claim under Section 75 is a “like” claim against the creditor. It essentially mirrors the claim Mr B and Mrs F could make against the Supplier. A claim for misrepresentation against the Supplier would ordinarily be made under Section 2(1) of the Misrepresentation Act 1967. And the limitation period to make such a claim expires six years from the date on which the cause of action accrued (see Section 2 of the LA). But a claim, like the one in question here, under Section 75 is also ‘an action to recover any sum by virtue of any enactment’ under Section 9 of the LA. And the limitation period under that provision is also six years from the date on which the cause of action accrued. The date on which the cause of action accrued was the Time of Sale. I say this because Mr B and Mrs F entered into the purchase of their timeshare at that time based on the alleged misrepresentations of the Supplier – which they say were relied upon. And as the loan from the Lender was used to help finance the purchase, it was when they entered into the Credit Agreement that they suffered a loss. Mr B and Mrs F first notified the Lender of their Section 75 claim on 5 March 2021. And as more than six years had passed between the Time of Sale and when that claim was first put to the Lender, I don’t think it was unfair or unreasonable of the Lender to reject Mr B and Mrs F’s concerns about the Supplier’s alleged misrepresentations. Section 75 of the CCA: the Supplier’s Breach of Contract I have already summarised how Section 75 of the CCA works and why it gives consumers a right of recourse against a lender. So, it is not necessary to repeat that here other than to say that, if I find that the Supplier is liable for having breached the Purchase Agreement, the Lender is also liable.

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As I have explained, Section 75 most likely did not apply to Mr B and Mrs F’s Section 75 claim because of the cash price attached to Fractional Club membership. Section 75A may provide assistance in such circumstances for breach of contract claims if certain conditions are met. However, it’s not necessary to make findings on whether those conditions were met here as I don’t think the Lender is liable to pay any compensation for a breach of contract by the Supplier anyway. As noted above when looking at the claim there was an unfair credit relationship, Mr B and Mrs F say that they could not holiday where and when they wanted to. On my reading of the complaint, this suggests that the Supplier was not living up to its end of the bargain, meaning it could be viewed as potentially breaching the Purchase Agreement. It is not clear precisely when this was alleged to have happened, but if it happened within six years of the time the complaint was first made, such a claim would not have been made too late under the LA. Yet, like any holiday accommodation, availability was not unlimited – given the higher demand at peak times, like school holidays, for instance. Some of the sales paperwork likely to have been signed by Mr B and Mrs F states that the availability of holidays was/is subject to demand. I accept that they may not have been able to take certain holidays. But I have not seen enough to persuade me that the Supplier had breached the terms of the Purchase Agreement. So, from the evidence I have seen, I do not think the Lender is liable to pay Mr B and Mrs F 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. 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. Having considered the entirety of the credit relationship between Mr B and Mrs F 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. The commission arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements 4. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; 5. The inherent probabilities of the sale given its circumstances; and 6. Any existing unfairness from a related credit agreement. I have then considered the impact of these on the fairness of the credit relationship between Mr B and Mrs F and the Lender. The Supplier’s sales & marketing practices at the Time of Sale

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Mr B and Mrs F’s complaint about the Lender being party to an unfair credit relationship was and is made for several reasons. They include, allegations that: 1. the right checks weren’t carried out before the Lender lent to Mr B and Mrs F. 2. the loan interest was excessive. 3. Mr B and Mrs F were not given a choice of lender by the Supplier. However, as things currently stand, none of these strike me as reasons why this complaint should succeed. I haven’t seen anything to persuade me that the right checks weren’t carried out by the Lender given this complaint’s circumstances. But 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 B and Mrs F 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 B and Mrs F. The PR has not explained how, if it were true, Mr B and Mrs F not being offered a different lender to pay for Fractional Club membership caused them any unfairness or financial loss. Mr B and Mrs F were aware of the interest rate set out on the face of the Credit Agreement, as well as the term of the loan and the monthly repayments, so they understood what it was they were taking out. Further, I don’t think the rate of interest was excessive, compared either to other rates available from other point-of-sale lenders or on the open market, so I can’t say it would be fair or reasonable to tell the Lender to do anything because of this. Overall, therefore, I don’t think that Mr B and Mrs F’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 now 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 B and Mrs F’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 and Mr B and Mrs F say 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.

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A share in the Allocated Property clearly constituted an investment as it offered Mr B and Mrs F 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.1 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 B and Mrs F 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 B and Mrs F, 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 B and Mrs F 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. 1 The PR has argued that Fractional Club membership amounted to an Unregulated Collective Investment Scheme, however this was considered and rejected in 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).

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Was the credit relationship between the Lender and Mr B and Mrs F 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 B and Mrs F 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 B and Mrs F 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 B and Mrs F decided to go ahead with their purchase. The PR’s notes from a call it said it had with Mr B and Mrs F on 10 March 2020 make reference to five different purchases between 2012 and 2018, including the Time of Sale. The notes record that Mr B and Mrs F were asked “why purchase upgrade?”, and they answered with “profit when finish…as they could sell and take the money back + extra, as the value will increase”. The notes do not make it clear that this relates to the Time of Sale, and in any event they do not set out what the Supplier said at that particular time to make Mr B and Mrs F think this. In a written statement the PR provided in January 2024, Mr B and Mrs F do specifically reference the Time of Sale. However, their only reference to any investment element of Fractional Club membership at that particular point in time is where they say “Once again we were informed that would be able to sell these on without difficulty at any point before the expiry date of 31.12.2034”. While the testimony goes on to sum up that they were assured there would be “a good profit” and that this was “the icing on the cake” again this isn’t specific to the Time of Sale and seems to be a general statement. Lastly, it appears different written testimony was given to the Lender when Mr B and Mrs F complained to it, with a more detailed account of the Time of Sale. When describing the sale this testimony says: “The selling methods used are always to persuade clients that they're missing out on marvellous opportunities which will provide amazing holidays and at the end of the contract you will be able to sell your fraction/weeks/property back without difficulty and also make a good return on your investment.” However, when describing why they “were persuaded to buy”, Mr B and Mrs F said: “Trying to book anything was extremely difficult unless you could do so at least 12 months before and at certain times 18 months before you wish to travel. For most people this is not feasible due to work/family commitments which then means that very often you're unable to use the supplier for holidays in that year despite having paid money in annual fees and the cost of the initial purchase. We were assured that purchasing fractional rights would guarantee us the weeks we wanted.” And

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“we were persuaded that this would be all round better for us as it was in our preferred destination and we would have much easier access to the weeks we wanted” So while Mr B and Mrs F talk about having been told they could make a good return when describing how Fractional Club membership was sold to them, when describing why they went ahead with their purchase, there is no emphasis on such a prospect having any influence over their decision making and they talk exclusively about the availability of accommodation. I recognise that the PR’s notes record Mr B and Mrs F placing importance on the prospect of financial gain or profit. And I know the PR will likely say that this, and the reference to profit in the other written statement applied to all the sales referenced in those notes and testimony, including the Time of Sale. However, given there is a lack of specificity in these notes, and given when Mr B and Mrs F do provide testimony that was more specific to the Time of Sale they say their motivation for the purchase was the availability of accommodation, I’m not persuaded overall that Mr B and Mrs F were motivated by the prosect of a profit or financial gain from Fractional Club membership at the Time of Sale. That doesn’t mean Mr B and Mrs F 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 as Mr B and Mrs F 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 B and Mrs F’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). And for that reason, I do not think the credit relationship between Mr B and Mrs F 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 The PR says that Mr B and Mrs F were not given sufficient information at the Time of Sale by the Supplier about membership, including about the ongoing costs of Fractional Club membership and the fact that Mr B and Mrs F’s heirs could inherit these costs. 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 Mr B and Mrs F sufficient information, in good time, on the various charges they could have been subject to as Fractional Club members in order to satisfy the requirements of Regulation 12 of the 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 Mr B and Mrs F nor the PR have persuaded me that they would not have pressed ahead with their 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 facts and circumstances.

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As for the PR’s argument that Mr B and Mrs F’s heirs would inherit the on-going management charges, I fail to see how that could be the case or that it could have led to an unfairness that warrants a remedy. Conclusion In conclusion, as things currently stand, I do not think that the Lender acted unfairly or unreasonably when it dealt with the relevant Section 75 claims, I am not persuaded that the Lender was party to a credit relationship with Mr B and Mrs F under the Credit Agreement that was unfair to them for the purposes of Section 140A of the CCA – nor do I see any other reason why it would be fair or reasonable to direct the Lender to compensate them.” The PR did not agree with my provisional decision and provided further comments and evidence for consideration. The Lender did not respond. The complaint has therefore been returned to me for a final 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 no different to that shared in several hundred ombudsman decisions on very similar complaints. And with that being the case, it is not necessary to set it out here. 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, I’ve reached the same decision as that which I outlined in my provisional findings, for broadly the same reasons. 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. Rather, I’ve focused here on addressing what I consider to be the key issues in deciding this complaint and explaining the reasons for reaching my final decision. The PR’s further comments in response to my provisional decision in the main relate to the issue of whether the credit relationship between Mr B and Mrs F and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Mr B and Mrs F as an investment at the Time of Sale. As outlined in my provisional decision, the PR originally raised various other points of complaint, all of which I addressed at that time. But they didn’t make any further comments in relation to those in their response to my provisional decision. Indeed, they haven’t said

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they disagree with any of my provisional conclusions in relation to those other points. And since I haven’t been provided with anything more in relation to those other points by either party, I see no reason to change my conclusions in relation to them as set out in my provisional decision. So, I’ll focus here on the PR’s points raised in response. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? The PR has provided its further thoughts as to Mr B and Mrs F’s likely motivations for purchasing Fractional Club membership. I recognise it has interpreted Mr B and Mrs F’s testimony differently to how I have and thinks it points to them having been motivated by the prospect of a financial gain from Fractional Club membership. In my provisional decision I explained the reasons why I didn’t think Mr B and Mrs F’s purchase was motivated by the prospect of a financial gain. And although I have carefully considered the PR’s arguments in response to this, I’m not persuaded the conclusion I reached on this point were unfair or unreasonable. Ultimately, Mr B and Mrs F in their own words said they purchased Fractional Club membership at the Time of Sale because they were having difficulty booking accommodation under their previous membership and because they thought they would have easier access to the weeks they wanted. While I agree that one motivation does not exclude all others, to my mind there would have been a clearer reference to the prospect of a profit or financial gain, when Mr B and Mrs F set out their reasons in their written testimony for why they were persuaded to purchase Fractional Club if they were indeed motivated by such a prospect to make their purchase. But there isn’t one within that part of their testimony. And, neither is there in their other written testimony where they refer to the Time of Sale, referring only to being told they could sell on any point and stating they increased their points to give them greater flexibility. Given these parts of the written statements specifically described the Time of Sale, and given the other parts of the statements did not, referring only in general terms to several sales, I’ve given the most weight to Mr B and Mrs F’s statements that specifically describe their recollections of the Time of Sale. And I remain unpersuaded by these that Mr B and Mrs F were motivated to purchase Fractional Club membership by the prospect of a profit or financial gain. So, ultimately, for the above reasons, along with those I already explained in my provisional decision, I remain unpersuaded that any breach of Regulation 14(3) of the Timeshare Regulations was material to Mr B and Mrs F’s purchasing decision. And for that reason, I do not think the credit relationship between Mr B and Mrs F and the Lender was unfair to them even if the Supplier had breached Regulation 14(3). Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that the Lender acted unfairly or unreasonably when it dealt with Mr B and Mrs F’s Section 75 claims, and I am not persuaded that the Lender was party to a credit relationship with them under the Credit 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. My final decision For the reasons I have explained, I do not uphold Mr B and Mrs F’s complaint.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B and Mrs F to accept or reject my decision before 21 April 2026. Michael Ball Ombudsman

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