Shawbrook Bank Limited · DRN-5103280

The complaint The estate of Mr M’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) acted unfairly and unreasonably by being party to unfair credit relationships with the late Mr M under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’). What happened The late Mr M purchased membership of a timeshare (the ‘Fractional Club’) from a timeshare provider (the ‘Supplier’) on 11 January 2013 (the ‘Time of Sale 1’). He entered into an agreement with the Supplier to trade in 8,000 of his existing ‘European Collection’ points for 8,000 fractional points at a cost of £4,400 (the ‘Purchase Agreement 1’). A conversion price for his European Collection points of £1 per point was given. Fractional Club membership was asset backed – which meant it gave the late Mr M more than just holiday rights. It also included a share in the net sale proceeds of a property named on his Purchase Agreement (the ‘Allocated Property’) after his membership term ends. The late Mr M paid for his Fractional Club membership by taking finance of £4,400 from the Lender in his sole name (the ‘Credit Agreement 1’). The late Mr M subsequently made another purchase of a Fractional Club membership from the Supplier on 16 September 2013 (the ‘Time of Sale 2’). He entered into an agreement with the Supplier to again trade in 6,000 of his existing ‘European Collection’ points for 6,000 fractional points at a cost of £3,564 (the ‘Purchase Agreement 2’). Again, a conversion price for his European Collection points of £1 per point was given. The late Mr M paid for this Fractional Club membership by taking finance of £7,946.42 from the Lender in his sole name (the ‘Credit agreement 2’). This loan also consolidated his previous one. The late Mr M – using a professional representative (the ‘PR’) – wrote to the Lender on 17 November 2016 (the ‘Letter of Complaint’) to complain about the Lender being party to unfair credit relationships under the Credit Agreements and related Purchase Agreements for the purposes of Section 140A of the CCA. The Letter of Complaint set out several reasons why the late Mr M felt that the credit relationships between him and the Lender were unfair to him under Section 140A of the CCA. In summary, they include the following: 1. He was pressured into purchasing Fractional Club membership by the Supplier. 2. The decision(s) to lend were irresponsible because the Lender didn’t carry out the right creditworthiness assessment. The Lender dealt with the late Mr M’s concerns as a complaint and issued its final response letter on 19 January 2017, rejecting it on every ground.

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The late Mr M’s PR then referred the complaint to the Financial Ombudsman Service on his behalf. At this stage, they added a new point to the complaint. Namely, that the Lender had paid the Supplier an undisclosed commission. On 22 March 2022, the late Mr M’s PR informed our Service that Mr M had passed away and therefore the complaint is now being brought by the late Mr M’s estate. The complaint was then assessed by an Investigator who, having considered the information on file, rejected the complaint on its merits. The estate of Mr M disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me. At this stage, the PR added a new point of complaint. They said they felt it was clear that the Fractional Club membership(s) were sold to the late Mr M as an investment and this was fundamental to his purchase(s). They referred to the judgment in a Judicial Review of one of the lead decisions previously issued by this Service (R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd; R. (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin) (‘Shawbrook & BPF v FOS’)) and said they felt that the complaint should therefore be upheld as a result. I issued a provisional decision. And, I made the following provisional findings (which form part of this final decision): “Section 140A of the CCA: did the Lender participate in an unfair credit relationship? The estate of Mr M says that the credit relationship(s) between him and the Lender was unfair under Section 140A of the CCA, when looking at all the circumstances of the case, including parts of the Supplier’s sales process at the Times of Sale that the late Mr M had concerns about. It is those concerns that I explore here. As Section 140A of the CCA is relevant law, I do have to consider it. So, in determining what is fair and reasonable in all the circumstances of the case, I will consider whether the credit relationship(s) between the late Mr M and the Lender was unfair. As I have said, there were two purchases which are the subject of this complaint, each with an associated credit agreement, so each must and will be considered as individual events. However, the evidence provided by the late Mr M and the PR is identical for each, so I see no purpose in this provisional decision to repeat my findings twice. So, while treating them as individual events, I will set out my findings as one. Under Section 140A of the CCA, a debtor-creditor relationship can be found to have been or be unfair to the debtor because of one or more of the following: the terms of the credit agreement itself; how the creditor exercised or enforced its rights under the agreement; and any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement) (s.140A(1) CCA). Such a finding may also be based on the terms of any related agreement (which here, includes the Purchase Agreement) and, when combined with Section 56 of the CCA, on anything done or not done by the supplier on the creditor’s behalf before the making of the credit agreement or any related agreement.

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Section 56 plays an important role in the CCA because it defines the terms “antecedent negotiations” and “negotiator”. As a result, it provides a foundation for a number of provisions that follow it. But it also creates a statutory agency in particular circumstances. And while Section 56(1) sets out three of them, the most relevant to this complaint are negotiations conducted by the supplier in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement. A debtor-creditor-supplier agreement is defined by Section 12(b) of the CCA as “a restricted- use credit agreement which falls within section 11(1)(b) and is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier […]”. And Section 11(1)(b) of the CCA says that a restricted-use credit agreement is a regulated credit agreement used to “finance a transaction between the debtor and a person (the ‘supplier’) other than the creditor […] and “restricted-use credit” shall be construed accordingly.” The Lender doesn’t dispute that there was a pre-existing arrangement between it and the Supplier. So, the negotiations conducted by the Supplier during the sale of the late Mr M’s membership of the Fractional Club were conducted in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement as defined by Section 12(b). That made them antecedent negotiations under Section 56(1)(c) – which, in turn, meant that they were conducted by the Supplier as an agent for the Lender as per Section 56(2). And such antecedent negotiations were “any other thing done (or not done) by, or on behalf of, the creditor” under s.140(1)(c) CCA. Antecedent negotiations under Section 56 cover both the acts and omissions of the Supplier, as Lord Sumption made clear in Plevin, at paragraph 31: “[Section] 56 provides that [when] antecedent negotiations for a debtor-creditor-supplier agreement are conducted by a credit-broker or the supplier, the negotiations are “deemed to be conducted by the negotiator in the capacity of agent of the creditor as well as in his actual capacity”. The result is that the debtor’s statutory rights of withdrawal from prospective agreements, cancellation and rescission may arise on account of the conduct of the negotiator whether or not he was the creditor’s agent.’ […] Sections 56 and 140A(3) provide for a deemed agency, even in a case where there is no actual one. […] These provisions are there because without them the creditor’s responsibility would be engaged only by its own acts or omissions or those of its agents.” And this was recognised by Mrs Justice Collins Rice in Shawbrook & BPF v FOS at paragraph 135: “By virtue of the deemed agency provision of s.56, therefore, acts or omissions ‘by or on behalf of’ the bank within s.140A(1)(c) may include acts or omissions of the timeshare company in ‘antecedent negotiations’ with the consumer”. In the case of Scotland & Reast, the Court of Appeal said, at paragraph 56, that the effect of Section 56(2) of the CCA meant that “negotiations are deemed to have been conducted by the negotiator as agent for the creditor, and that is so irrespective of what the position would have been at common law” before going on to say the following in paragraph 74: “[...] there is nothing in the wording of s.56(2) to suggest any legislative intent to limit its application so as to exclude s.140A. Moreover, the words in s.140A(1)(c) "any other thing done (or not done) by, or on behalf of, the creditor" are entirely apposite to include antecedent negotiations falling within the scope of s.56(1)(c) and which are deemed by s.56(2) to have been conducted by the supplier as agent of the creditor. Indeed the purpose

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of s.56(2) is to render the creditor responsible for such statements made by the negotiator and so it seems to me wholly consistent with the scheme of the Act that, where appropriate, they should be taken into account in assessing whether the relationship between the creditor and the debtor is unfair.”1 So, the Supplier is deemed to be Lender’s statutory agent for the purpose of the pre- contractual negotiations. What’s more, the scope of that responsibility extends to both acts and omissions by the Supplier as the Supreme Court in Plevin made clear when it referred to ‘acts or omissions’ when discussing Section 56. And as Section 56(3)(b) says that an applicable agreement can’t try to relieve a person from liability for ‘acts or omissions’ of any person acting as, or on behalf of, a negotiator, it must follow that the reference to ‘omissions’ would only be necessary because they can be attributed to the creditor under Section 56. However, an assessment of unfairness under Section 140A isn’t limited to what happened immediately before or at the time a credit agreement and related agreement were entered into. The High Court held in Patel (which was recently approved by the Supreme Court in the case of Smith), that determining whether or not the relationship complained of was unfair had to be made “having regard to the entirety of the relationship and all potentially relevant matters up to the time of making the determination” – which was the date of the trial in the case of an existing credit relationship or otherwise the date the credit relationship ended. The breadth of the unfair relationship test under Section 140A, therefore, is stark. But it isn’t a right afforded to a debtor simply because of a breach of a legal or equitable duty. As the Supreme Court said in Plevin (at paragraph 17): “Section 140A […] does not impose any obligation and is not concerned with the question whether the creditor or anyone else is in breach of a duty. It is concerned with […] whether the creditor’s relationship with the debtor was unfair.” Instead, it was said by the Supreme Court in Plevin that the protection afforded to debtors by Section 140A is the consequence of all of the relevant facts. I have considered the entirety of the credit relationships between the late Mr M and the Lender along with all of the circumstances of the complaint and I do not think either of the credit relationship between them were 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 Supplier’s sales and marketing practices at the Times of Sale; and 2. The provision of information by the Supplier at the Times 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 Times of Sale; 4. The inherent probabilities of each of the sales given its circumstances. I have then considered the impact of the above on the fairness of the credit relationships between the late Mr M and the Lender. The Supplier’s sales & marketing practices at the Times of Sale 1 The Court of Appeal’s decision in Scotland was recently followed in Smith.

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The estate of Mr M’s complaint about the Lender being party to an unfair credit relationship was also made for several reasons, all of which I set out at the start of this decision. The PR says that the right checks weren’t carried out before the Lender lent to the late Mr M. I haven’t seen anything to persuade me that was the case in this complaint given its 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 the late Mr M was actually unaffordable before also concluding that he lost out as a result and then consider whether either of the credit relationships with the Lender were unfair to him for this reason. Again, from the information provided, I am not satisfied that the lending was unaffordable for the late Mr M. If there is any further information on this (or any other points raised in this provisional decision) that the estate of Mr M wishes to provide, I would invite them to do so in response to this provisional decision. The estate of Mr M says that he was pressured by the Supplier into purchasing Fractional Club membership at the Times of Sale. I acknowledge that he may have felt weary after a sales process that went on for a long time. But the late Mr M said little about what was said and/or done by the Supplier during his sales presentation(s) that made him feel as if he had no choice but to purchase Fractional Club membership when he simply did not want to. Indeed, it’s not something that was specifically mentioned in his witness statement at all. He was also given a 14-day cooling off period with both sales and no credible explanation has been provided for why he did not cancel his membership during that time. Moreover, he did go on to make his second purchase of Fractional Club membership – which I find difficult to understand if the reason he went ahead with the first purchase was because he was pressured into it. And with all of that being the case, there is insufficient evidence to demonstrate that the late Mr M made the decision to purchase Fractional Club membership because his ability to exercise that choice was significantly impaired by pressure from the Supplier. The PR also argues that the Supplier breached its fiduciary duty to the estate of Mr M by receiving commission from the Lender that it did not disclose. And that the Supplier failed to follow the guidance in relation to disclosure of commission in the Office of Fair Trading’s guidance for credit brokers and intermediaries (OFT1388) (the ‘OFT CBG’).2 And both of these things are additional reasons why the relationships between the Lender and the late Mr M were unfair. The PR cites Hurstanger and McWilliam – which I’ve considered. But based on what I’ve seen so far in this complaint, I am not persuaded that the Supplier, when acting as a credit broker, was under a duty to provide information, advice or a recommendation on an impartial or disinterested basis (as was found in Wood & Pengelly, a case relating to secret commission). Nor am I persuaded that the Supplier owed the estate of Mr M a fiduciary duty as the Court of Appeal held a broker did in Hurstanger – a case which involved the payment of ‘half-secret’ commission. With that being the case, the remedies that might be available at law in relation to the payment of secret or half-secret commission are not, in my view, available to them on this occasion. 2 The estate of Mr M’s complaints about the Lender’s alleged payment of undisclosed commission to the Supplier and its breach of fiduciary duty and failure to follow the OFT CBG fall directly under the Financial Ombudsman Service’s jurisdiction. So, they’re complaints that are both part of and separate to the complaint about an unfair credit relationship under Section 140A of the CCA. But as I don’t think either of those complaints should succeed for the same reasons why I don’t think the credit relationships between the Lender and the late Mr M were rendered unfair because of commission that was paid but went undisclosed, it isn’t necessary to repeat them.

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It's possible that that the Supplier, when acting as a credit broker, failed to follow the guidance in relation to payments of commission in the OFT CBG. But even if the Supplier did, I am not persuaded that makes a difference to the outcome in this complaint anyway. I say this because the amounts of commission paid by the Lender to suppliers (like the Supplier) was, on average, 0-4.6%3 of the amount borrowed and unlikely to be much more than 10%. In light of those likely levels of commission, I am not persuaded that the late Mr M would have acted differently at the Times of Sale even if the Supplier had disclosed the existence of commission in keeping with the OFT CBG. And on that basis, I am not persuaded that any non-disclosure and payment of commission and, in turn, any breaches of the credit broker’s regulatory obligations, are likely to have rendered the late Mr M’s credit relationships with the Lender unfair for the purposes of Section 140A given the circumstances of this complaint. I’m not persuaded, therefore, that either of the late Mr M’s credit relationships with the Lender was rendered unfair to him under Section 140A for any of the reasons above. But there is another reason, perhaps the main reason, why the estate of Mr M says his credit relationships with the Lender were unfair to him. And that’s the suggestion that Fractional Club membership was marketed and sold to him as an investment in breach of prohibition against selling timeshares in that way. Was Fractional Club membership marketed and sold at the Times of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations? The Lender does not dispute, and I am satisfied, that the late Mr M’s Fractional Club memberships 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 membership of the Fractional Club as an investment. This is what the provision said at the Times 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 PR says that the Supplier did exactly that at the Times of Sale. So, that is what I have considered next. The term “investment” is not defined in the Timeshare Regulations. In Shawbrook & BPF v FOS, the parties agreed 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” at [56]. I will use the same definition. The late Mr M’s share in the Allocated Property clearly, in my view, constituted an investment as it offered him the prospect of a financial return – whether or not, like all investments, that was more than what he first put into it. But 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. 3 The Lender provided the Financial Ombudsman Service with information on its commission rates – which I accept in confidence under DISP 3.5.9 [R]. But, in keeping with that rule, one of the Lender’s Managing Directors (who is a FCA Approved Person) confirmed, in summary, the information I have included in the paragraph above.

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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 the late Mr M 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 him as an investment, i.e. told him or led him to believe that Fractional Club membership offered him the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is evidence in this complaint that the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as the late Mr M, the financial value of his share in the net sales proceeds of the Allocated Property along with the investment considerations, risks and rewards attached to them. There were, for instance, disclaimers in the contemporaneous paperwork that state that Fractional Club membership was not sold to the late Mr M as an investment. With that said, while this allegation was not made by either the late Mr M nor his PR when he first complained about a credit relationship with the Lender that was unfair to him, I accept that it’s possible that Fractional Club membership was marketed and sold to him as an investment in breach of Regulation 14(3) given the difficulty the Supplier was likely to have had in presenting a share in the net sales proceeds of the Allocated Property as an important feature of Fractional Club membership without breaching the relevant prohibition. I also acknowledge that the two purchases in question here were on a ‘like-for-like’ basis i.e. the late Mr M did not acquire any additional points and therefore additional holiday rights as part of either transaction. So, this suggests that acquiring more holiday rights was not central to his purchases and there was some other reason he bought them. So, I have taken all of that into account. However, I’ve also considered the evidence that’s been provided by the late Mr M and the PR. As mentioned above, the PR did not make any such allegation in the original Letter of Complaint. Exchanging points with the Supplier for fractional points gave members two main benefits – a shorter membership term and an interest in the sale proceeds of the Allocated Property.4 The witness statement is signed by the late Mr M but not dated, however the PR say it was drafted before the Letter of Complaint. The following comments were made insofar as they relate to the allegation of the membership(s) being sold as an investment: “I confirm that we entered the fractional membership as were advised a shorter withdrawal period when the property was sold & my fractional points were repaid to me as a percentage of profit from the property sale. I have not used the product for holidays as I became disillusioned with [the Supplier] and decided to seek a reduction in my points hoping to dispose of the European Collection points and retain my fractional points given the financial return.” I’ve taken these comments into account, but beyond the bare allegation, little is said here about what the late Mr M was told, by whom and in what context to add colour and context to 4 There was also a rental scheme through which members could ‘rent out’ their holiday entitlement, however I can’t see there is any allegation or evidence this was something the late Mr M was interested in.

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the allegation made. The comments also don’t explain how exactly each of the memberships were sold as an investment at each of the Times of Sale being complained about. The brief recollections which refer to being told about the shorter term associated with Fractional Club membership and receiving a percentage of any profit from the sale of the Allocated Property also appear to simply relate to a factual description of how the product worked, rather than Mr M saying that he was led to believe he would make a profit on what he paid for the memberships on the sale of the properties. I also note that in his own words, the late Mr M identifies the shorter membership term associated with Fractional Club membership being a feature and benefit, which indicates that this may have been a reason for him to purchase it. Something that fits with his later dealing with the Supplier. I note that the late Mr M also mentioned in his witness statement that he previously sought a reduction of his points, and the PR has provided copies of the emails in relation to this between the late Mr M and the Supplier. The late Mr M originally got in touch in August 2014 to enquire about this. He didn’t differentiate between his different types of membership in this email, only that he wanted to withdraw and if possible, reduce his points so that the annual management fees would be more manageable as he was struggling to afford these at that time. He said [my emphasis] “to reduce my points holding to a more manageable level so that I am more able to comfortably pay the management fees and still be able to enjoy relaxation”. The Supplier explained to the late Mr M that they could consider surrender and/or a reduction of points in relation to his European Collection membership if relevant evidence was provided of the relevant grounds for doing so. But they explained that this wasn’t possible with Fractional Club membership due to the shorter membership term already associated with it. And, that if he wanted to surrender those membership(s), he would need to sell them on the open market. The late Mr M replied and confirmed that he wanted to reduce his European Collection points (at that time 40,000) to 10,000 points. And, to keep his fractional points to his existing 14,000, making “24,000 points total holding. I would rather retain membership if possible as I still enjoy my vacations with [the Supplier]” (my emphasis). I acknowledge that the late Mr M said in his witness statement (which was put together later) that he wished to keep his fractional points “given the financial return”. But the contemporaneous evidence from the time i.e. the emails I’ve referred to above, doesn’t support this. I say this because in these emails he didn’t mention anything about the investment element of the Fractional Club membership or explain to the Supplier this is the reason he wanted to keep it. Originally, it seems he wanted to see if it was possible to surrender both his European Collection and Fractional Club memberships and/or reduce points in both which is difficult to explain if he thought his fractional points were an investment which he was going to get a return or profit from. It seems that the late Mr M only kept them after the Supplier’s explanation that surrender was not possible with the fractional points, rather than because he saw them as an investment. Again, from what’s been said in these emails, the late Mr M didn’t differentiate between the two types of memberships he held in this sense, referring to European Collection and Fractional Club together as a “total holding”. Further, it’s clear from what he said (highlighted above) that the holiday element of the membership was important to him and was ultimately the reason he still wanted to keep some of the points. Further, if Fractional Club membership had been marketed and sold as an investment by the Supplier at the Times of Sale, it is difficult to understand why the PR made no mention of it in

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the Letter of Complaint.5 And with that being the case, in the absence of persuasive evidence to suggest otherwise, I find that it is unlikely that the Supplier led him to believe that membership offered him the prospect of a financial gain (i.e., a profit), given the evidence provided. But even if I am wrong to conclude that, on this occasion, membership was unlikely to have been sold in that way given what I have already said about the late Mr M’s recollections of the sales process at the Times of Sale, I am not currently persuaded that would make a difference to the outcome in this complaint anyway. Were the credit relationship(s) between the Lender and the late Mr M rendered unfair? As the Supreme Court’s judgment in Plevin makes clear, it does not automatically follow that regulatory breaches 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 and 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 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 seems to me that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between the late Mr M and the Lender that was unfair to him and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) which, having taken place during its antecedent negotiations with the late Mr M, is covered by Section 56 of the CCA, falls within the notion of "any other thing done (or not done) by, or on behalf of, the creditor" for the purposes of 140(1)(c) of the CCA and deemed to be something done by the 5 Our Investigator also asked the PR to provide a copy of the call recording of the late Mr M’s original conversation with them where he explained his complaint, but the PR said it would not be practical to obtain this recording. So, I am not able to say on what basis the late Mr M was unhappy with Fractional Club membership, beyond what was set out in the Letter of Complaint.

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Lender) lead him to enter into each of the Purchase Agreements and the associated Credit Agreements is an important consideration. Looking at the Letter of Complaint, as I’ve already outlined, it didn’t include the allegation of the memberships being sold as an investment. As noted above, in the witness statement provided, the late Mr M also identified a shorter membership term being a benefit. And, the late Mr M said in discussions with the Supplier that he wanted to “still be able to enjoy relaxation” and “I would rather retain membership if possible as I still enjoy my vacations with [the Supplier]”. So, again, I can’t say the evidence suggests that any investment element in the Fractional Club membership was important to him choosing to take them out or was factored into his thinking a year or so later when he tried to give them up. Rather, the late Mr M identified a separate reason why Fractional Club membership were attractive to him – the shorter membership term. 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 the late Mr M’s decision to purchase Fractional Club membership at the Times of Sale was motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests he would have pressed ahead with his purchases whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think either of the credit relationships between the late Mr M and the Lender was unfair to him even if the Supplier had breached Regulation 14(3).” I also provided my findings on commission in more detail by email on 30 December 2025, saying: “In my provisional decision, I noted that one of the estate of Mr M’s other concerns related to the alleged payment of commission by the Lender to the Supplier for acting as a credit broker and arranging the Credit Agreements. I explained in my provisional decision that I didn’t think any non-disclosure and payment of commission created an unfair relationship in the circumstances of this complaint. But as both sides will 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’). In light of this, I’m outlining my thoughts on this issue in this letter so that both parties have the opportunity to respond before I finalise 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 Office of Fair Trading’s Irresponsible Lending Guidance – 31 March 2010

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The primary purpose of this guidance was to provide greater clarity for businesses and consumer representatives as to the business practices that the Office of Fair Trading (the ‘OFT’) thought might have constituted irresponsible lending for the purposes of Section 25(2B) of the CCA. Below are the most relevant paragraphs as they were at the relevant time: • Paragraph 2.2 • Paragraph 2.3 • Paragraph 5.5 The OFT’s Guidance for Credit Brokers and Intermediaries - 24 November 2011 The primary purpose of this guidance was to provide clarity for credit brokers and credit intermediaries as to the standards expected of them by the OFT when they dealt with actual or prospective borrowers. Below are the most relevant paragraphs as they were at the relevant time: • Paragraph 2.2 • Paragraph 3.7 • Paragraph 4.8 The PR says that a payment of commission from the Lender to the Supplier at the Times of Sale should lead me to uphold this complaint because, simply put, information in relation to those payments went undisclosed at the Times 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: 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:

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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 the estate of Mr M in arguing that their credit relationships with the Lender were unfair to the late Mr M 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 the late Mr M, 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 the late Mr M 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 Times 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 Times 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 either of the credit relationships in question unfair to the late Mr M. 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 Agreements that the late Mr M entered into wasn’t high. For the Time of Sale 1, at £352, it was only 8% of the amount borrowed and 8.6% as a proportion of the charge for credit. And, for the Time of Sale 2, at £635.71, it was only 8% of the amount borrowed and 8.7% as a proportion of the charge for credit. So, had he known at the Times of Sale that the Supplier was going to be paid a flat rate of commission at that level, I’m not currently persuaded that he either wouldn’t have understood that or would have otherwise questioned the size of the payment at that time. After all, the late Mr M wanted Fractional Club membership and had no obvious means of his own to pay for it. And at such a low level, the impact of commission on the cost of the credit he needed for timeshares he wanted doesn’t strike me as disproportionate. So, I think he would still have taken out the loans to fund his purchases at the Times of Sale had the amount of commission been disclosed.

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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 Agreements. And as it wasn’t acting as an agent of the late Mr M but as the supplier of contractual rights he obtained under the Purchase Agreements, the transactions don’t strike me as ones with features that suggest the Supplier had an obligation of ‘loyalty’ to him when arranging the Credit Agreements 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 relationships unfair to the late Mr M. 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 either of the credit relationships between the late Mr M and the Lender under the Credit Agreements and related Purchase Agreements were unfair to him. 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 the late Mr M’s credit relationships with the Lender weren’t unfair to him 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 the estate of Mr M’s complaint about unfair credit relationships. So, for completeness, I’ve considered those grounds on that basis here. 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 the late Mr M (i.e., secretly). And the second relates to the Lender’s compliance with the regulatory guidance in place at the Times 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 the late Mr M 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 Times 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 loans to fund their purchases at the Times of Sale had there been more adequate disclosure of the commission arrangements that applied at that time.” So, in summary, I wasn’t persuaded by any of the arguments put forward for why the credit relationships between the late Mr M and the Lender were unfair to him under Section 140A of the CCA. And I couldn’t see any other reason why it would be fair or reasonable to direct the Lender to compensate the estate of Mr M – all of which led me to provisionally conclude that there was no basis on which to uphold the complaint. The Lender accepted my provisional decision. The PR disagreed with my overall conclusion. When doing that, it provided significant submissions at first but it went on to withdraw them and replace them with more concise submissions – which was primarily concerned with the

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suggestion that the late Mr M’s Fractional Club memberships had been marketed and sold as an investment in contravention of a prohibition on selling timeshares in that way. The PR also repeated its concerns about the pressure the late Mr M was put under by the Supplier at the Times of Sale, the Lender’s decisions to lend being irresponsible and payment of commission to the Supplier by the Lender – albeit with a focus on the Supreme Court’s judgment in Hopcraft v Close Brothers Limited; Johnson v FirstRand Bank Limited; Wrench v FirstRand Bank Limited [2025] UKSC 33 (‘Hopcraft, Johnson and Wrench’). As a result, the complaint was passed back to me for further thought and my Final Decision. 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 rules6 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. 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. However, as the PR’s more concise response to my provisional decision only relates, in the main, to whether the memberships were sold to the late Mr M as an investment, concerns about the pressure the late Mr M was put under by the Supplier at the Times of Sale, the Lender’s decisions to lend being irresponsible and payment of commission to the Supplier by the Lender, as I haven’t been provided with new arguments and/or evidence to consider in relation to their other points originally raised, I see no reason to change or add to my conclusions (as set out in the summary of my provisional decision above) in relation to them. 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 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. 6 Specifically Rule 3.6.4 in the Dispute Resolution Rules found in the Financial Conduct Authority’s Handbook for Rules and Guidance.

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Section 140A of the CCA: did the Lender participate in an unfair credit relationship? Having reconsidered the entirety of the relationships along with everything that has now been said and/or provided by both sides, I still don’t think the credit relationships between the late Mr M and the Lender were likely to have been rendered unfair to him 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 Times of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Times 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 Times of Sale; 4. The inherent probabilities of the sales given their circumstances; and, when relevant 5. Any existing unfairness from a related credit agreement. I have also reconsidered any commercial (including commission) arrangements between the Lender and the Supplier at the Times of Sale and the disclosure of those arrangements. The PR continues to argue that the late Mr M was unduly pressured into his purchases at the Times of Sale by the Supplier. And, they’ve now provided copies of two questionnaires the late Mr M completed in March 2021 (addressed in more detail later in this decision). And, they’ve pointed to certain comments within this questionnaire which they feel evidences their allegation of undue pressure. For example, the late Mr M ticked ‘yes’ when asked if he attempted to leave the sales presentation(s) but was prevented from doing so. And, he’s ticked ‘no’ when asked if he was given an opportunity to go away and think about the offer. But, I note the PR has also said that the questionnaire confirms the late Mr M was not made aware of the cooling off period at all. But in the questionnaire, when asked whether he was advised about a cooling off period, the late Mr M ticked ‘yes’. He also confirmed he was given time to read through the sales paperwork and had the opportunity to ask the Supplier to clarify it where necessary. And, that he wasn’t asked to sign the documents before he had read them. So, while I acknowledge that there may have been certain parts of the Supplier sales process which may have made saying ‘no’ more difficult, it’s difficult to see from the evidence the PR has provided that the late Mr M was unduly pressured into his purchases. Again, the late Mr M said little about what was said and/or done by the Supplier during his sales presentation(s) that made him feel as if he had no choice but to purchase Fractional Club membership when he simply did not want to. As I said before, it’s not something that was specifically mentioned in his witness statement at all. Moreover, he did go on to make his second purchase of Fractional Club membership – which I still find difficult to understand if the only reason he went ahead with the first purchase was because he was pressured into it. And with all of that being the case, I am not persuaded the late Mr M made the decision to purchase his Fractional Club memberships because his 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 relationships in question were unfair.

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The Supplier’s alleged breach(es) of Regulation 14(3) of the Timeshare Regulations There is competing evidence in this complaint as to whether the Fractional Club memberships were marketed and/or sold by the Supplier at the Times of Sale as an investment in breach of Regulation 14(3) of the Timeshare Regulations. I acknowledge that it was possible that Fractional Club membership was marketed and sold to the late Mr M as an investment in breach of Regulation 14(3). But it isn’t necessary to make a formal finding on that particular issue for the purposes of my determination on this complaint because I thought and still think that 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. […]

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[…] 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 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 the late Mr M and the Lender that was unfair to him and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led him to enter into the respective Purchase Agreements and the Credit Agreements 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 relationships between the late Mr M and the Lender unfair to him? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Times 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 relationships between the late Mr M and the Lender under the Credit Agreements and related Purchase Agreements. 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 memberships was an important and motivating factor when the late Mr M decided to go ahead with his purchases to the extent that he would have made an entirely different purchasing decision had there not been a breach of Regulation 14(3) at those times. I acknowledged in my PD, and do so again here, that the two purchases in question here were on a ‘like-for-like’ basis i.e. the late Mr M did not acquire any additional points and therefore additional holiday rights as part of either transaction. So, this suggests that acquiring more holiday rights was not central to his purchases and there was some other reason he bought them. Exchanging points with the Supplier for fractional points gave members two main benefits – a shorter membership term and an interest in the sale proceeds of the Allocated Property.7 The witness statement is signed by the late Mr M but not dated, however the PR say it was drafted before the Letter of Complaint. The following comments were made insofar as they relate to the allegation of the membership(s) being sold as an investment: “I confirm that we entered the fractional membership as were advised a shorter withdrawal period when the property was sold & my fractional points were repaid to me as a percentage of profit from the property sale. 7 There was also a rental scheme through which members could ‘rent out’ their holiday entitlement, however again, I can’t see there is any allegation or evidence this was something the late Mr M was interested in.

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I have not used the product for holidays as I became disillusioned with [the Supplier] and decided to seek a reduction in my points hoping to dispose of the European Collection points and retain my fractional points given the financial return.” I again note that in his own words, the late Mr M identifies the shorter membership term associated with Fractional Club membership being a feature and benefit, which indicates that this may have been a reason for him to purchase it. Something that fits with his later dealing with the Supplier. The late Mr M also mentioned in his witness statement that he previously sought a reduction of his points, and the PR provided copies of the emails in relation to this between the late Mr M and the Supplier. The late Mr M originally got in touch in August 2014 to enquire about this. He didn’t differentiate between his different types of membership in this email, only that he wanted to withdraw and if possible, reduce his points so that the annual management fees would be more manageable as he was struggling to afford these at that time. He said [my emphasis] “to reduce my points holding to a more manageable level so that I am more able to comfortably pay the management fees and still be able to enjoy relaxation”. The Supplier explained to the late Mr M that he could consider surrender and/or a reduction of points in relation to his European Collection membership if relevant evidence was provided of the relevant grounds for doing so. But they explained that this wasn’t possible with Fractional Club membership due to the shorter membership term already associated with it. And, that if he wanted to surrender those membership(s), he would need to sell them on the open market. The late Mr M replied and confirmed that he wanted to reduce his European Collection points (at that time 40,000) to 10,000 points. And, to keep his fractional points to his existing 14,000, making “24,000 points total holding. I would rather retain membership if possible as I still enjoy my vacations with [the Supplier]” (my emphasis). I again acknowledge here that the late Mr M said in his witness statement (which was put together later) that he wished to keep his fractional points “given the financial return”. But the contemporaneous evidence from the time i.e. the emails I’ve referred to above, doesn’t support this. I say this because in these emails he didn’t mention anything about the investment element of the Fractional Club membership or explain to the Supplier this is the reason he wanted to keep it. Originally, it seems he wanted to see if it was possible to surrender both his European Collection and Fractional Club memberships and/or reduce points in both which is difficult to explain if he thought his fractional points were an investment which he was going to get a return or profit from. It seems that the late Mr M only kept them after the Supplier’s explanation that surrender was not possible with the fractional points, rather than because he saw them as an investment. Again, from what’s been said in these emails, the late Mr M didn’t differentiate between the two types of memberships he held in this sense, referring to European Collection and Fractional Club together as a “total holding”. Further, it’s clear from what he said (highlighted above) that the holiday element of the membership was important to him and was ultimately the reason he still wanted to keep some of the points. So, in the witness statement provided, the late Mr M also identified a shorter membership term as being a benefit. And, the late Mr M said in discussions with the Supplier that he wanted to “still be able to enjoy relaxation” and “I would rather retain membership if possible as I still enjoy my vacations with [the Supplier]”. As described above, as part of their response to my provisional decision, the PR provided a copy of two questionnaires the late Mr M completed. These are signed and dated 28 March 2021, which is around four years after he had complained and after the PR had already

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referred the complaint to our Service. It seems odd that these questionnaires would have been completed at that time and there has been no explanation as to why the late Mr M was asked to complete these at that point. It should also be noted that the completion of these questionnaires appears to have been around four years after the date that the PR suggests the late Mr M gave his written recollections in his witness statement. In my view, these questionnaires are leading, in the sense that they ask pre-set, largely tick- box questions, in contrast to the late Mr M’s witness statement which is his own explanation of his recollections. So, I don’t feel able to place much, if any, weight on what’s been said in them. I can see that in the first questionnaire (labelled ‘S75 client questionnaire’), it asks the following question with the following answer from the late Mr M: “Q: What were the main reasons for you to enter into a contract with the timeshare owner? A: the possibility of future withdrawal from membership when property in which my fractional points had been lodged was sold and my fractional points were repaid to me as a percentage of profit from property sale [sic]”. And: “Q: Please explain your experience why you have not used the product A: I became disillusioned with [the Supplier] and decided to seek a reduction in my points portfolio and a total withdrawal from [Supplier] membership on discovering that the fractional points were knowingly mis-sold and monies paid not refundable to me by timeshare owner.” Again, it appears from this that the shorter membership term was the reason the late Mr M made his purchases. I acknowledge he’s referred to receiving a ‘percentage of profit’ from the sale of the Allocated Property. But, in my view, here he’s simply describing what would happen at the end of the membership term and how this meant he would have a shorter membership term when it did. And, he’s again described seeking a reduction in his points and ‘total withdrawal’ from membership, which I therefore think simply aligns with what I’ve already explained above about the other evidence available including the late Mr M’s prior correspondence with the Supplier. I therefore can’t see the evidence suggests that any investment element in the Fractional Club membership was important to him in choosing to take them out or was factored into his thinking a year or so later when he tried to give them up. Rather, the late Mr M identified a separate reason why Fractional Club membership was attractive to him – the shorter membership term, in addition to the holidays they provided. So again, 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 the late Mr M decided to go ahead with his purchases. That doesn’t mean he wasn’t interested in a share in the Allocated Properties. After all, that wouldn’t be surprising given the nature of the product at the centre of this complaint. But as the evidence doesn’t persuade me that the late Mr M’s purchases were motivated by his share in the Allocated Properties and the possibility of a profit, I still don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decisions the late Mr M ultimately made.

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On balance, therefore, for all of the reasons I’ve set out above, I don’t think the credit relationships between the late Mr M and the Lender were unfair to him even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Times 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 30 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. And while I recognise that the PR might disagree with the thoughts I shared on 30 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 relationships between the latter and the late Mr M under the Credit Agreements and related Purchase Agreements unfair for the purposes of Section 140A. I have also considered what the PR has said about the ‘true cost’ of the late Mr M’s Fractional Club memberships where it has argued that once maintenance fees and the cost of the credit had been factored in, the membership would have cost him in excess of £36,000 which equates to a one-week annual holiday costing over £2,400. But it seems likely that the late Mr M was aware, at the Times of Sale, of the cost of the Fractional Club memberships, the interest he was being charged, as well as that he needed to pay maintenance fees every year and the cost of those fees in the first year. So, I think the late Mr M had a clear indication of the likely cost to him of taking out memberships and it is something that he agreed to purchase. It follows, I cannot say that the actual cost of the product was in and of itself something that gave rise to an unfair credit relationship nor something which meant the loans were unaffordable. I also do not agree that the total cost of the product in and of itself is clear proof that they were bought for their investment potential. As I’ve set out above, I am not saying that the late Mr M was not interested in his share of the Allocated Properties. Rather, I am saying that I’m not persuaded by the evidence provided that the memberships were bought based on the prospect of a financial gain. Conclusion Having adopted my provisional findings, and reconsidered the facts and circumstances of this complaint, I’m still not persuaded that the Lender was party to credit relationships with the late Mr M that were unfair to him 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 the estate of Mr M. My final decision For the reasons set out above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask the estate of Mr M to accept or reject my decision before 24 April 2026. Fiona Mallinson Ombudsman

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