Shawbrook Bank Limited · DRN-6258268

The complaint Mr M and Miss R’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) acted unfairly and unreasonably by being party to an unfair credit relationship with them under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’). What happened Mr M and Miss R 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 8 August 2018 (the ‘Time of Sale’). They entered into an agreement with the Supplier to buy 910 fractional points at a cost of £12,421 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mr M and Miss R 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 M and Miss R paid for their Fractional Club membership by taking finance of 16,249 from the Lender (the ‘Credit Agreement’). Mr M and Miss R – using a professional representative (the ‘PR’) – wrote to the Lender on 3 October 2024 (the ‘Letter of Complaint’) to raise a number of different concerns. As those concerns haven’t changed since they were first raised, and as both sides are familiar with them, it isn’t necessary to repeat them in detail here beyond the summary above. The Lender dealt with Mr M and Miss R concerns as a complaint and issued its final response letter on 14 October 2024, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service. It was assessed by an Investigator who, having considered the information on file, rejected the complaint on its merits. Mr M and Miss R disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me. I issued a provisional decision (“PD”) on the case. In summary, I said: Having considered the entirety of the credit relationship between Mr M and Miss R 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;

-- 1 of 13 --

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, when relevant 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 M and Miss R and the Lender. The Supplier’s sales & marketing practices at the Time of Sale [Consumer’s] complaint about the Lender being party to an unfair credit relationship was and is made for several reasons. The PR says, for instance, that: 1. the right checks weren’t carried out before the Lender lent to Mr M and Miss R; 2. The Credit Agreement was arranged by a broker acting outside of its authorisation, 3. Mr M and Miss R was pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale; 4. there was one or more unfair contract terms in the Purchase Agreement; and; 5. Fractional Club membership was marketed and sold as investment in breach of a prohibition on doing so. While the PR says that the right affordability checks weren’t carried out at the Time of Sale, even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied that the money lent to Mr M and Miss R 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 the Mr M and Miss R. Connected to this is the suggestion by the PR that the Credit Agreement was arranged by an unauthorised credit broker the upshot of which is to suggest that the Lender wasn’t permitted to enforce the Credit Agreement. However, it looks to me like Mr M and Miss R knew, amongst other things, how much they were borrowing and repaying each month, who they were borrowing from and that they were borrowing money to pay for Fractional Club membership. And as the lending doesn’t look like it was unaffordable for them, even if the Credit Agreement was arranged by a broker that didn’t have the necessary permission to do so (which I make no formal finding on), I can’t see why that led to Mr M and Miss R financial loss – such that I can say that the credit relationship in question was unfair on them as a result. And with that being the case, I’m not persuaded that it would be fair or reasonable to tell the Lender to compensate them, even if the loan wasn’t arranged properly. I acknowledge that Mr M and Miss R may have felt weary after a sales process that went on for a long time. But they say little about what was said and/or done by the Supplier during their sales presentation that made them feel as if they had no choice but to purchase Fractional Club membership when they simply did not want to. They were also given a 14- day cooling off period and they have not provided a credible explanation for why they did not cancel their membership during that time. And with all of that being the case, there is insufficient evidence to demonstrate that Mr M and Miss R made the decision to purchase

-- 2 of 13 --

Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. The PR also says that there was one or more unfair contract terms in the Purchase Agreement. But as I can’t see that any such terms were operated unfairly against Mr M and Miss R in practice, nor that any such terms led them to behave in a certain way to their detriment, I’m not persuaded that any of the terms governing Fractional Club membership are likely to have led to an unfairness that warrants a remedy. Overall, therefore, I don’t think that Mr M and Miss R credit relationship with the Lender was rendered unfair to them under Section 140A for any of the reasons above. But there is another reason, perhaps the main reason, why the PR says the credit relationship with the Lender was unfair to them. And that’s the suggestion that Fractional Club membership was marketed and sold to them as an investment in breach of prohibition against selling timeshares in that way. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations The Lender does not dispute, and I am satisfied, that Mr M and Miss R’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. This is what the provision said at the Time of Sale: “A trader must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment if the proposed contract would be a regulated contract.” But the PR says that the Supplier did exactly that at the Time of Sale. The term “investment” is not defined in the Timeshare Regulations. But for the purposes of this provisional decision, and by reference to the decided authorities, an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit. A share in the Allocated Property clearly constituted an investment as it offered Mr M and Miss R the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But it is important to note at this stage that the fact that Fractional Club membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se. In other words, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. To conclude, therefore, that Fractional Club membership was marketed or sold to Mr M and Miss R 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.

-- 3 of 13 --

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 M and Miss R, 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 M and Miss R as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Was the credit relationship between the Lender and the Consumer rendered unfair? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I now need to consider what impact that breach had on the fairness of the credit relationship between Mr M and Miss R 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 M and Miss R 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 M and Miss R decided to go ahead with their purchase. I’ll explain why. Based on several other complaint letters I’ve seen from the same PR for different consumers, I think it’s fair to say that the Letter of Complaint is heavily templated. In the most part it’s identical to others, and where that’s not the case the message conveyed bears significant similarity to others. As a result, I think the Letter of Complaint is likely of little value insofar as establishing Mr M and Miss R’s thoughts at the Time of Sale. So, I place little weight on it. The PR has provided a signed testimony from Mr M and Miss R dated 2 October 2024. In it, they say that they had no prior experience with the timeshares before being invited to attend a presentation about Fractional Club membership. They give an account of what was said there: “He explained that with this membership, we would be able to own a fraction of a property and when it was sold in 17 years time, we would get a minimum of 5% of the sale price back. The salesperson told us that the price of the property would increase over the 17 years due to how attractive the property is.

-- 4 of 13 --

From what the salesperson told us, the investment aspect made the product sound very attractive and was the main reason we were thinking about purchasing the membership. We didn’t end up making the purchase at the same meeting as we were not certain we wanted to buy the membership and we wanted to think about it first.” Mr M and Miss R then give an account of a subsequent presentation where they purchase the membership in question: “He explained that we would be owning a part of a property alongside other people and when the property was sold we would receive a minimum of 5% of the sale proceeds. From the reps explanation, we understood that we were investing into properties similar to the ones that we had been shown earlier in the day. He also told us that we would get a very good return for our money and that we would be making a very good investment.” They go on to say: “When it came to purchasing the membership, the most important aspect of the purchase was the investment aspect — the rep told us that the membership was definitely an investment. Nothing else about the membership was particularly of interest to us however, getting back money when the property was sold was a motivation for us.” In weighing up Mr M and Miss R’s statement I’m conscious that it was submitted 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. From that judgement it could be held that the marketing of a Fractional Club membership as an investment and that having been a motivating factor in the subsequent purchase was a key issue when deciding whether the credit agreement was unfair or not. The PR references the determination made by this service which was subject to that judgement. So, I think it’s clear that the PR, Mr M and Miss R were aware of a case with similar circumstances which was upheld, as well as the reasons for that. That’s further demonstrated by a later submission in which the PR appears to have sent an incomplete template with a note to inset that determination as well as Mr M and Miss R’s testimony in support of the case. So, I think there’s a real risk here that Mr M and Miss R’s recollections could’ve been influenced by that. There’s a number of reasons that the case and the subsequent judgement differ from this case. In any event, it’s for me to determine this case on its own facts. In summary, I don’t think I can place much weight on Mr M and Miss R’s testimony. I haven’t found it to be persuasive, and I think there’s reason to believe it’s likely to not be an accurate representation of their thoughts at the Time of Sale. I’ll explain why. Whilst Mr M and Miss R’s testimony is signed and dated, there are certain phrases and I’ve seen in testimonies for other consumers represented by the same PR. There’s also part which aren’t necessarily identical, but in my view are sufficiently similar to lead me to conclude that the PR was likely involved in generating that statement. It causes me to question the statement’s value in establishing Mr M and Miss R’s thoughts at the time of sale.

-- 5 of 13 --

An example of this is at the outset of the statement where Mr M and Miss R say that they had no prior experience with timeshares – a line common to other customer testimonies from the same PR – and they go on to give an account of attending the first Fractional Club membership presentation. But Mr M and Miss R also accept that they owned a timeshare membership prior to that, one which simply gave them holiday rights. Our investigator questioned Mr M and Miss R’s assertion that they were told they’d receive 5% of the sale proceeds of an Allocated Property, pointing out that they’d ultimately signed an agreement which noted their share of the Allocated Property was 1.92%. Mr M and Miss R responded to this point specifically and said: “The percentage amount is irrelevant; a share is a share regardless of the amount. I have all the documentation from [Supplier] to confirm the correct percentage. This is a rather petty comment to make with no substance behind it and nit picking over something that was taken out 8 years ago now. It is unrealistic to expect us to recall exactly every inch of detail spanning such a long, past history.” I accept that Mr M and Miss R might find it challenging to recall every detail given the time which has passed since the Time of Sale. Indeed, experience tells me that the more time that passes between a complaint and the event complained about, the more risk there is of recollections being vague, inaccurate and/or influenced by discussion with others. That being said, I think it’s unusual that Mr M and Miss R recall the same specific (and inaccurate) figure being presented at two different presentations, particularly because they accept that they have a written record of their share but nonetheless refer to an inaccurate figure in their account of the Time of Sale. I think it’s fair to say that Mr M and Miss R’s assertion that nothing other than the investment aspect of Fractional Club membership was of interest to them is doubtful. I say this because at the point they made the purchase in question they’d already held a membership with the same Supplier for holiday entitlement, and this purchase gave them further entitlement. Moreover, I’ve seen their booking history which shows that they used their membership regularly up until 2024. These factors strongly suggest to me that Mr M and Miss R were interested in holiday entitlement. I have to question why they’d say otherwise. Lastly, I have doubts of Mr M and Miss R’s account that the Supplier said membership was “definitely an investment”. I’ve seen training material, presentation slides as well as brochures from the Supplier from around the Time of Sale. I’ve also considered several other similar complaints about the sale of Fractional Club membership around the Time of Sale. In my experience, I think it’s unlikely that was said. All of the above causes me to question the reliability of Mr M and Miss R’s recollection of the Time of Sale. Given the possibility that their recollections might have been influenced by some of the factors I’ve mentioned above, as well as the extent to which I find some of what’s been said to be inaccurate, I don’t think I can give their written recollections the weight necessary to finding that the credit relationship in question was unfair for reasons relating to a breach of the relevant prohibition. That doesn’t mean they weren’t interested in a share in the Allocated Property. After all, that wouldn’t be surprising given the nature of the product at the centre of this complaint. But as Mr M and Miss R themselves don’t persuade me that their purchase was motivated by their share in the Allocated Property and the possibility of a profit, I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision they ultimately made.

-- 6 of 13 --

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 M and Miss R’s decision to purchase Fractional Club membership at the Time of Sale was motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests they would have pressed ahead with their purchase whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationship between Mr M and Miss R 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 M and Miss R was not given sufficient information at the Time of Sale by the Supplier about the ongoing costs of Fractional Club membership. 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 failures 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 M and Miss R 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 2010 Timeshare Regulations (which was concerned with the provision of ‘key information’). But even if that was the case, I cannot see that the ongoing costs of membership were applied unfairly in practice. And as neither Mr M and Miss R nor the PR have persuaded me in this particular case that they would not have pressed ahead with their purchase had those details 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. As for the PR’s assertion that that if the degree of the various ongoing costs had been expressly made known by the Supplier then “any right-minded individual” would not have entered into the agreement, given what I’ve said above, particularly about the way the ongoing costs of membership were applied, I don’t think such a generalisation can be made in this case. The PR says that a payment of commission from the Lender to the Supplier at the Time of Sale should lead me to uphold this complaint because, simply put, information in relation to that payment went undisclosed at the Time of Sale. As both sides already know, the Supreme Court handed down an important judgment on 1 August 2025 in a series of cases concerned with the issue of commission: Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd [2025] UKSC 33 (‘Hopcraft, Johnson and Wrench’). The Supreme Court ruled that, in each of the three cases, the commission payments made to car dealers by lenders were legal, as claims for the tort of bribery, or the dishonest assistance of a breach of fiduciary duty, had to be predicated on the car dealer owing a fiduciary duty to the consumer, which the car dealers did not owe. A “disinterested duty”, as described in Wood v Commercial First Business Ltd & ors and Business Mortgage Finance 4 plc v Pengelly [2021] EWCA Civ 471, is not enough. However, the Supreme Court held that the credit relationship between the lender and Mr Johnson was unfair under Section 140A of the CCA because of the commission paid by the

-- 7 of 13 --

lender to the car dealer. The main reasons for coming to that conclusion included, amongst other things, the following factors: 1. The size of the commission (as a percentage of the total charge for credit). In Mr Johnson’s case it was 55%. This was “so high” and “a powerful indication that the relationship…was unfair” (see paragraph 327); 2. The failure to disclose the commission; and 3. The concealment of the commercial tie between the car dealer and the lender. The Supreme Court also confirmed that the following factors, in what was a non-exhaustive list, will normally be relevant when assessing whether a credit relationship was/is unfair under Section 140A of the CCA: 1. The size of the commission as a proportion of the charge for credit; 2. The way in which commission is calculated (a discretionary commission arrangement, for example, may lead to higher interest rates); 3. The characteristics of the consumer; 4. The extent of any disclosure and the manner of that disclosure (which, insofar as Section 56 of the CCA is engaged, includes any disclosure by a supplier when acting as a broker); and 5. Compliance with the regulatory rules. From my reading of the Supreme Court’s judgment in Hopcraft, Johnson and Wrench, it sets out principles which apply to credit brokers other than car dealer–credit brokers. So, when considering allegations of undisclosed payments of commission like the one in this complaint, Hopcraft, Johnson and Wrench is relevant law that I’m required to consider under Rule 3.6.4 of the Financial Conduct Authority’s Dispute Resolution Rules (‘DISP’). But I don’t think Hopcraft, Johnson and Wrench assists Mr M and Miss R in arguing that their credit relationship with the Lender was unfair to them for reasons relating to commission given the facts and circumstances of this complaint. I haven’t seen anything to suggest that the Lender and Supplier were tied to one another contractually or commercially in a way that wasn’t properly disclosed to Mr M and Miss R, nor have I seen anything that persuades me that the commission arrangement between them gave the Supplier a choice over the interest rate that led Mr M and Miss R into a credit agreement that cost disproportionately more than it otherwise could have. I acknowledge that it’s possible that the Lender and the Supplier failed to follow the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them. But as I’ve said before, the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. And with that being the case, it isn’t necessary to make a formal finding on that because, even if the Lender and the Supplier failed to follow the relevant regulatory guidance at the Time of Sale, it is for the reasons set out below that I don’t currently think any such failure is itself a reason to find the credit relationship in question unfair to Mr M and Miss R.

-- 8 of 13 --

In stark contrast to the facts of Mr Johnson’s case, the amount of commission paid by the Lender to the Supplier for arranging the Credit Agreement that Mr M and Miss R entered into wasn’t high. At £812.45, it was only 5% of the amount borrowed and even less than that (4.63%) as a proportion of the charge for credit. So, had they known at the Time of Sale that the Supplier was going to be paid a flat rate of commission at that level, I’m not currently persuaded that they either wouldn’t have understood that or would have otherwise questioned the size of the payment at that time. After all, Mr M and Miss R wanted Fractional Club membership and had no obvious means of their own to pay for it. And at such a low level, the impact of commission on the cost of the credit they needed for a timeshare they wanted doesn’t strike me as disproportionate. So, I think they would still have taken out the loan to fund their purchase at the Time of Sale had the amount of commission been disclosed. What’s more, based on what I’ve seen so far, the Supplier’s role as a credit broker wasn’t a separate service and distinct from its role as the seller of timeshares. It was simply a means to an end in the Supplier’s overall pursuit of a successful timeshare sale. I can’t see that the Supplier gave an undertaking – either expressly or impliedly – to put to one side its commercial interests in pursuit of that goal when arranging the Credit Agreement. And as it wasn’t acting as an agent of Mr M and Miss R but as the supplier of contractual rights they obtained under the Purchase Agreement, the transaction doesn’t strike me as one with features that suggest the Supplier had an obligation of ‘loyalty’ to them when arranging the Credit Agreement and thus a fiduciary duty. Overall, therefore, I’m not currently persuaded that the commission arrangements between the Supplier and the Lender were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to Mr M and Miss R. Section 140A: Conclusion Given all of the factors I’ve looked at in this part of my decision, and having taken all of them into account, I’m not persuaded that the credit relationship between Mr M and Miss R and the Lender under the Credit Agreement and related Purchase Agreement was unfair to them. And as things currently stand, I don’t think it would be fair or reasonable that I uphold this complaint on that basis. Commission: The Alternative Grounds of Complaint While I’ve found that Mr M and Miss R credit relationship with the Lender wasn’t unfair to them for reasons relating to the commission arrangements between it and the Supplier, two of the grounds on which I came to that conclusion also constitute separate and freestanding complaints to Mr M and Miss R complaint about an unfair credit relationship. 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 Mr M and Miss R (i.e., secretly). And the second relates to the Lender’s compliance with the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them. However, for the reasons I set out above, I’m not persuaded that the Supplier – when acting as credit broker – owed Mr M and Miss R a fiduciary duty. So, the remedies that might be available at law in relation to the payment of secret commission aren’t, in my view, available to them. And while it’s possible that the Lender failed to follow the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between it and the Supplier, I don’t think any such failure on the Lender’s part is itself a reason to uphold this complaint because, for the reasons I also set out above, I think they would still have taken out the loan to fund their purchase at the Time of Sale had

-- 9 of 13 --

there been more adequate disclosure of the commission arrangements that applied at that time. In conclusion, I was not persuaded that the Lender was party to a credit relationship with Mr M and Miss R under the Credit Agreement that was unfair to them for the purposes of Section 140A of the CCA – nor did I see any other reason why it would be fair or reasonable to direct the Lender to compensate them. The Lender accepted my PD. The PR also responded – they did not accept the PD and provided some further comments and evidence they wish to be considered. Having received the relevant responses from both parties, I’m now finalising my decision. The legal and regulatory context In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is 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. But I would add that the following regulatory rules/guidance are also relevant: The Consumer Credit Sourcebook (‘CONC’) – Found in the Financial Conduct Authority’s (the ‘FCA’) Handbook of Rules and Guidance Below are the most relevant provisions and/or guidance as they were at the relevant time: • CONC 3.7.3 [R] • CONC 4.5.3 [R] • CONC 4.5.2 [G] The FCA’s Principles The rules on consumer credit sit alongside the wider obligations of firms, such as the Principles for Businesses (‘PRIN’). Set out below are those that are most relevant to this complaint: • Principle 6 • Principle 7 • Principle 8 What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Following the responses from both parties, I’ve considered the case afresh and having done so, 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

-- 10 of 13 --

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 the PD in the main relate to the issue of whether the credit relationship between Mr M and Miss R and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Mr M and Miss R as an investment at the Time of Sale. As outlined in my PD, 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 PD. Indeed, they haven’t said 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 PD. 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 Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations As I explained in my PD, although I found there was a possibility that the Supplier breached Regulation 14(3) at the Time of Sale, I wasn’t persuaded that the evidence suggested that Mr M and Miss R purchased Fractional Club membership in whole or in part down to any breach of Regulation 14(3). In response to my PD the PR has maintained that Mr M and Miss R’ have repeatedly stated that the investment aspect of membership was the reason they bought the product. It also disagrees with my reasons for doubting the credibility of what Mr M and Miss R and said that if credibility issues remain, then they should be explored though an “oral discussion”. 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 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

-- 11 of 13 --

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 Mr M and Miss R and the Lender that was unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) which, having taken place during its antecedent negotiations with Mr M and Miss R 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 Lender) lead them to enter into the Purchase Agreement and the Credit Agreement is an important consideration. As I explained in my PD, I found that there were several things said in Mr M and Miss R’s testimony that caused me to question whether it was an accurate representation of their thoughts at the Time of Sale. What the PR has said in response to the PD has not caused me to change my mind on what was said in the PD, and I don’t find it necessary to repeat what was said in my PD. I’m still of the view that in the time which passed between the sale of their Fractional Club membership and a complaint being made, it’s possible that their recollections might have been influenced by some of the factors I mentioned. I think that’s supported by some of what was said in Mr M and Miss R’s testimony appearing to be inaccurate – such as their experience of timeshares as well as what they say they were told their share of the proceeds of the Allocated Property would be. Given that, I still don’t think I can give their written recollections the weight necessary to finding that the credit relationship in question was unfair for reasons relating to a breach of the relevant prohibition. Regarding the PR’s suggestion of an “oral examination”, I don’t think that’s necessary here. This Service was set up to decide complaints informally and it is for me to determine what evidence I need to decide what a fair and reasonable outcome to a complaint is. Having considered everything, I do not think I need to hold an oral hearing to fairly determine this complaint. I’m satisfied I’ve been able to weigh up what Mr M and Miss R said against the available evidence and arguments to determine what I think happened on the balance of probabilities without the need for an oral hearing. I also note that following our investigators assessment (which was along the same lines as my PD) Mr M and Miss R provided a detailed response. My PD is clear about why I had concerns about the why I hadn’t been persuaded by what was said in Mr M and Miss R’s testimony. And it provided an opportunity for Mr M and Miss R to clarify matters, but what’s been said in response hasn’t led me to doubt what I said in my PD. Overall, and as I said before, even if the Supplier had marketed or sold the membership as an investment in breach of Regulation 14(3) (which I still make no finding on here), I’m not persuaded Mr M and Miss R’s decision to make the purchase was motivated by the prospect of a financial gain – whether solely or in part. So, I still don’t think the credit relationship between Mr M and Miss R and the Lender was unfair to her for this reason.

-- 12 of 13 --

My final decision For the reasons explained above, my final decision is that I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M and Miss R to accept or reject my decision before 24 April 2026. Stephen Trapp Ombudsman

-- 13 of 13 --