Shawbrook Bank Limited · DRN-5812282

The complaint Mrs B and Mr L complain Shawbrook Bank Limited (“the Lender”) has failed to honour a claim brought under Section 75 of the Consumer Credit Act 1974 (“CCA”) and participated in an unfair credit relationship with them within the meaning of Section 140A of the CCA. Mrs B and Mr L are represented in their complaint by a professional representative (“PR”). What happened Mrs B and Mr L had a timeshare at a particular resort and, while on holiday using their timeshare in June 2014, they were introduced to a timeshare provider (the “Supplier”), which was promoting a new timeshare scheme at the resort. Mrs B and Mr L entered an agreement with the Supplier to purchase a different kind of timeshare: a “fractional” timeshare. This entitled them to holiday every year in week 23 in apartment 403 at the resort, but also came with a right to a share in the net sale proceeds of the apartment (the “Allocated Property”), when the timeshare scheme was due to come to an end in 2030. Mrs B and Mr L purchased the timeshare week for 15,882 euros. They also traded in their existing timeshare at the resort. A loan with the Lender was arranged for £13,500 to cover the purchase price, repayable over 120 months at £195.27 per month. On return to the resort in June 2015, Mrs B and Mr L made another purchase from the Supplier, adding week 22 in apartment 300 to their holdings. This week cost an additional 13,285 euros, financed by another loan from the Lender, this time of £10,000, repayable over 60 months at £225.60 per month. Mrs B and Mr L repaid both loans early, settling the earlier loan in January 2016 and the later loan in February 2017. Mrs B and Mr L went on to make a number of other purchases from the Supplier, swapping their weeks to other apartments or different times of year, three times between July 2016 and December 2017. It’s my understanding that none of these transactions was financed by the Lender, so they do not form a part of this complaint. Mrs B and Mr L, via PR, complained to the Lender in September 2019, on the grounds of connected lender liability as a result of alleged mis-selling by the Supplier. Broadly speaking, the allegations were as follows: • The Supplier had told Mrs B and Mr L the timeshare was an investment. • The Supplier had told Mrs B and Mr L the timeshare would be re-sold for a profit. • The Supplier had told Mrs B and Mr L that their previous timeshare was in perpetuity. • The Supplier had told Mrs B and Mr L that there was a guaranteed rental programme

-- 1 of 6 --

under which they could rent out their timeshare weeks every year for at least 1,500 euros, meaning they would make a profit over and above their annual maintenance fees. The Lender rejected the complaint in full. PR wrote back to the Lender to express its disagreement and reiterating many of its points and some of its general concerns about the Supplier’s conduct. The Lender stood by its decision not to uphold the complaint, which was subsequently referred to the Financial Ombudsman Service for an independent assessment. After a delay, one of our Investigators looked into the matter. She didn’t think the complaint should be upheld. PR responded to say it wanted to appeal the complaint and have an Ombudsman review it. At this point it also reframed Mrs B and Mr L’s complaint as a complaint about an unfair credit relationship under Section 140A of the CCA, and made the following points: • As well as telling Mrs B and Mr L that the product was an investment, the Supplier had told them that they would make a profit in 2030 when the timeshare scheme ended and the Allocated Property was sold. It had clearly not been realistic of the Supplier to have told Mrs B and Mr L that they would make a profit in 2030, given the amounts that had been paid for various weeks in the apartment. • The new owners of the hotel after the Supplier’s closure, had said they would not be honouring the re-sale of the apartment in 2030 or any rental programme. • It had never been explained to Mrs B and Mr L that if they defaulted on their loan repayments to the Lender, that their timeshare would be confiscated. Sometime later, another Investigator reviewed the complaint and issued an assessment of his own. Like our first Investigator, he didn’t think it should be upheld, reasoning that a complete lack of any first-hand testimony from Mrs B and Mr L made it difficult to substantiate PR’s allegations. Our Investigator didn’t think the ceasing to trade of the Supplier prevented Mrs B and Mr L from being able to exercise their rights under the timeshare purchase contracts. PR responded to say that Mrs B and Mr L wanted to provide first hand testimony and questioned why the Financial Ombudsman Service had not specifically asked for this previously. Our second Investigator said he would welcome any testimony from Mrs B and Mr L, and asked that PR provide this by 4 September 2025, or let him know if more time was required. We have not heard anything from PR since, and the case has now been passed to me to decide. 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. Having done so, I do not think this complaint should be upheld. 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.

-- 2 of 6 --

What is more, I have made my decision on the balance of probabilities – which means I have based it on what I think is more likely than not to have happened given the available evidence and the wider circumstances. Before going to analyse the specifics of the complaint in detail, I think it would be useful to set out how it is that the Lender could potentially be required to provide redress to Mrs B and Mr L based on their complaint about what the Supplier did (or didn’t do). The two main avenues via which they could seek redress are through a claim under Section 75 of the CCA, or through a complaint that the Lender participated in an unfair credit relationship with them under Section 140A of the CCA. 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. In short, a claim against the Lender under Section 75 essentially mirrors the claim Mrs B and Mr L could make against the Supplier. Certain conditions must be met if the protection afforded to consumers is engaged, including, for instance, the cash price of the purchase and the nature of the arrangements between the parties involved in the transaction. The Lender does not dispute that the relevant conditions are met in this complaint. And as I’m satisfied that Section 75 applies, if I find that the Supplier is liable for having misrepresented something to Mrs B and Mr L, or having been in breach of contract, the Lender is also liable. The application of Section 140A is more complicated. Insofar as is relevant to this case, it means that the debtor-creditor relationship between Mrs B and Mr L, and the Lender can be found to have been unfair to them because of anything done (or not done) by, or on behalf, of the Lender, before the making of the credit agreements. An unfair debtor-creditor relationship can also be based on the terms of a related agreement (such as the agreements to purchase the timeshares) and, when combined with section 56 of the CCA, on anything done or not done by the Supplier on the Lender’s behalf before the making of the credit agreements or any related agreements. Section 56 has the effect of making the Supplier the Lender’s agent for the purposes of the negotiations leading up to the purchases. However, just because the Supplier may have done something wrong and breached a legal or equitable duty, doesn’t necessarily mean that the relationship between Mrs B and Mr L, and the Lender, will have been rendered unfair. It’s important to consider all of the relevant facts before concluding that this is, or was, the case. First, I’ve considered whether or not Mrs B and Mr L had a valid claim against the Lender under Section 75 of the CCA. But before do that, I think it’s important to tackle a very important issue which our second Investigator focused on in his assessment – that of the lack of any direct testimony from Mrs B and Mr L. The significance of the lack of direct testimony This is a complaint focused on things that happened a long time ago. In particular, it is about things that were alleged to have been said to Mrs B and Mr L, rather than written down. When our Investigators made their assessments of the complaint, the events in question had taken place around nine years ago or more. And at the time PR first wrote to the Lender about the complaint, at least four years had passed since those events.

-- 3 of 6 --

It appears that no direct testimony (for example, a witness statement) was supplied to the Lender. Nor has any direct testimony been supplied to the Financial Ombudsman Service from March 2020 when PR first wrote to us about the case, to date. All we have is the original letter of complaint as well as follow-up submissions from PR. I don’t think the letter of complaint is a proper substitute for hearing from Mrs B and Mr L in their own words.1 The letter is essentially a series of assertions not supported by evidence from Mrs B, Mr L, or other contemporaneous sources. As far as I can see, PR first offered to provide direct testimony from Mrs B and Mr L in September 2025. This was after two Investigators had issued unfavourable assessments, and after the judgment in R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin) (“Shawbrook & BPF v FOS”) was handed down. Experience tells me that, the more time that passes between a complaint and the events complained about, the more risk there is of recollections being vague, inaccurate and/or influenced by discussion with others. In light of this, I think there is a very real risk that any direct testimony produced by PR now would be coloured by the judgment in Shawbrook & BPF v FOS. I note that no testimony has in fact been produced by PR, but had such testimony been produced now then it is likely there would be very little weight that I could attach to it. Mrs B and Mr L’s Section 75 claim for misrepresentation For the purposes of this case, a misrepresentation would be a false statement of fact made by the Supplier to Mrs B and Mr L, and which they relied on when deciding to make their purchase. In this case, it’s been alleged by PR that the Supplier told Mrs B and Mr L that their previous timeshare was in perpetuity, their new timeshares were an investment that would make them a profit in 2030 (or through earlier resale) and that they could rent out their weeks for in excess of 1,500 euros per year. While PR’s submissions have not been especially clear, I understand it to be alleging that none of these statements was true. As I’ve discussed above, there is no first-hand evidence from Mrs B or Mr L in this case of what the Supplier said prior to them purchasing their timeshare. In light of this, it’s very difficult for me to conclude that (in the absence of documentary evidence to support it) the Supplier made any of the false statements alleged. I’ve considered the available paperwork completed for both purchases, and have been able to find no references to renting out of the weeks, or that they were investments which would return a profit either through sale in 2030 or any earlier resale. Ultimately, I think there’s insufficient persuasive evidence that the alleged false statements were made. So the Lender did not act unfairly or unreasonably in declining to honour Section 75 claims from Mrs B and Mr L on the basis of misrepresentation by the Supplier. 1 It is also my understanding based on previous comments from PR that, to some extent, the original letter of complaint may be a “composite” based on conversations with multiple complainants. If that is the case, then it is difficult to know what aspects, if any, are based on Mrs B and Mr L’s individual circumstances, reducing its value as evidence of what happened when the timeshares were sold.

-- 4 of 6 --

I’d add here that no evidence has been provided as to whether Mrs B and Mr L’s previous timeshare was “in perpetuity” or not. So if there was evidence the Supplier had told them that their previous timeshare was in perpetuity, it would be difficult for me to conclude that this must have been a false statement. Section 75 – the Supplier’s alleged breaches of contract PR says that the Supplier has ceased trading, and that this means that their promises won’t be honoured. It has suggested Mrs B and Mr L won’t be able to enjoy their contractual rights relating to the timeshare weeks. PR also says that the hotel chain which now owns the resort has said it won’t honour the sale of the Allocated Properties in 2030. As explained in the section regarding misrepresentation – some of the promises PR refers to, such as the rental scheme, I don’t have sufficient persuasive evidence of the Supplier having made. So it follows that I won’t be considering whether such a promise constituted a contractual term which was later breached by the Supplier. It’s important to point out here that Mrs B and Mr L ceased to own the timeshare weeks they purchased using finance from the Lender, when they traded those weeks in against other purchases from the Supplier. The contracts came to an end at that point. So it’s difficult to see how the Supplier could have any contractual obligation to them to allow them to holiday in apartments 300 or 403 in weeks 23 and 22 respectively, or to give them a proportion of the proceeds of sale of those apartments in 2030. The contractual obligations appear to have been extinguished when the relevant weeks were traded in, so I’m unable to conclude the Supplier is, has been, or will be, in breach of contract in relation to the matters complained of. Overall, I don’t think the Lender acted unfairly or unreasonably by declining to honour a Section 75 claim from Mrs B and Mr L on the basis of breaches of contract by the Supplier. Section 140A – allegations of an unfair credit relationship Mrs B and Mr L’s complaint about an unfair credit relationship was brought for a number of reasons which I’ve outlined above. One of them was – in essence – the same set of alleged misrepresentations they complained about when making their Section 75 claim. I have dealt with those misrepresentations already and don’t need to do so again. Another reason advanced on Mrs B and Mr L’s behalf by PR, for their credit relationships with the Lender having been unfair to them, is that they were not told that, if they defaulted on their loan repayments, their timeshare would be confiscated. I think PR must be mistaken, because I have been able to find no evidence (such as terms within the loan agreements) that any default on their part in relation to their loans with the Lender, would have had any impact on their timeshare weeks. It may be the case that PR is referring to a relatively common kind of clause in timeshare contracts that allows a timeshare provider to repossess a timeshare where annual maintenance fees have gone unpaid. I have not been directed to any specific term in the relevant contracts, and no evidence of actual unfairness or harm having been caused to Mrs B and Mr L by any such term has been provided. So I don’t think the credit relationship between Mrs B and Mr L, and the Lender, was rendered unfair to them for any reason relating to the consequences of not making certain payments.

-- 5 of 6 --

The final reason given by PR is that the Supplier marketed or sold the timeshares to Mrs B and Mr L, as an investment, in breach of Regulation 14(3) of the Timeshare Regulations, and that this was the reason they went ahead with their purchases. This, PR suggests, rendered Mrs B and Mr L’s credit relationship with the Lender unfair to them. This part of the complaint fails for essentially the same reasons as the claims for misrepresentation. It has been alleged that something was said verbally by the Supplier when the timeshares were sold, which amounted to selling or marketing them as an investment. Other than PR’s assertion that this happened in the letter of complaint, there is no evidence in this case to support the allegations made. There is no testimony from Mrs B and Mr L, nor any supporting documentary evidence. In fact, the documentary evidence which does exist suggests Mrs B and Mr L did not buy the timeshares because they thought they were investments. I say that because I can see they signed declarations for each purchase which read: “..we have not entered into this purchase purely for a wider investment opportunity or financial gain”. And with all that being the case, I think there’s insufficient evidence the Supplier marketed or sold the timeshares to Mrs B and Mr L as investments at the relevant times. I’ve thought about PR’s other points, but my overall conclusion is that I’ve not seen evidence to show that the Lender participated in a credit relationship with Mrs B or Mr L that was unfair to them within the meaning of Section 140A of the CCA. My final decision For the reasons explained above, I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs B and Mr L to accept or reject my decision before 22 April 2026. Will Culley Ombudsman

-- 6 of 6 --