DRN-5811347

The complaint Mr and Mrs C’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) acted unfairly and unreasonably by (1) being party to unfair credit relationships with them under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying claims under Section 75 of the CCA. What happened The product at the centre of this complaint is Mr and Mrs C’s membership of a timeshare that I’ll call the ‘Fractional Club’ – points in which Mr and Mrs C purchased on the dates below: • 1200 fractional points on 22 November 2016 for £11,238 (Purchase Agreement 1) • 940 fractional points on 18 September 2017 for £6,930 – having traded in the first lot of 1200 fractional points. (Purchase Agreement 2) When appropriate, I’ll simply refer to the ‘Purchase Agreements.’ As this complaint is concerned with the purchases in November 2016 and September 2017, those are the ‘Times of Sale’ for the purposes of my decision. Fractional Club membership was asset backed – which meant it gave Mr and Mrs C more than just holiday rights. It also included a share in the net sale proceeds of a property named on the relevant purchase agreement (which I’ll refer to as the ‘Allocated Properties’) after their membership term ends. Mr and Mrs C paid for their fractional points by taking the following amounts of finance of from the Lender: • £11,238 on 22 November 2016 (‘Credit Agreement 1’) • £18,184 on 19 September 2017 (‘Credit Agreement 2’) – this loan consolidated the loan taken out with Credit Agreement 1. When appropriate, I’ll simply refer to the ‘’Credit Agreements.’ Mr and Mrs C – using a professional representative (the ‘PR’) – wrote to the Lender on 23 April 2020 (the ‘Letter of Complaint’) to raise a number of different concerns. 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 and Mrs C’s concerns as a complaint and issued its final response letter on 20 May 2021, 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, upheld the complaint about

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both sales on their merits. The Lender disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me to review. I issued a provisional decision explaining why I didn’t think the complaint should be upheld. I also indicated that I would provide my findings on the issue of commission once I knew more about that given the circumstances of Mr and Mrs C’s complaint. I did that by email on 30 January 2026. So, in summary, I wasn’t persuaded by any of the arguments put forward for why the credit relationship between Mr and Mrs C and the Lender was unfair to them 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 Mr and Mrs C – 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, while primarily concerned with the suggestion that Mr and Mrs C’s Fractional Club membership had been marketed and sold as an investment in contravention of a prohibition on selling timeshares in that way, included allegations of fraudulent misrepresentation. The PR also repeated its concerns about the 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 (‘Johnson’). 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 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:

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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. And having done that, I remain of the opinion that this complaint should not be upheld. However, before I explain again why, I want to make it clear that my role as an Ombudsman is not to address every single point that has been made to date. Instead, it is to decide what is fair and reasonable in the circumstances of this complaint. So, if I have not commented on, or referred to, something that either party has said, that does not mean I have not considered it. 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. So, while the PR argues in response to my provisional decision that, under Section 140B of the CCA, it is for the Lender to prove that its credit relationship with Mr and Mrs C wasn’t unfair simply because they allege that it was, that fails to understand that the Financial Ombudsman Service deals with complaints rather than causes of action. And, in any event, to suggest that unsubstantiated allegations of fact must be disproved by the Lender if the credit relationship isn’t to be deemed unfair also oversimplifies if not misunderstands the legal position. As HHJ David Cooke said in paragraph 26 of his judgment on Promontoria (Henrico) Ltd v. Gurcharn Samra [2019] EWHC 2327 (Ch): “…the onus is on [the creditor] to show, to the normal civil standard, that the relationship is not unfair because of any of the reasons set out in s 140A(1)(a)-(c). Whether it is so unfair is a matter for the court's overall judgment having regard to all the relevant circumstances and matters, including matters relating (i.e. personal) to the creditor and debtor. This onus on the claimant does not however mean, in my judgement…that where [the borrower alleging an unfair credit relationship] makes allegations of fact on which he relies he does not have the burden of proving them to the normal civil standard. The onus placed on the creditor is as to

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the relationship between it and the debtor, and does not have the effect that factual allegations made by Mr Samra must be accepted unless they can be positively disproved by contrary evidence.”1 Section 75 of the CCA: the Supplier’s misrepresentations at the Times of Sale The CCA introduced a regime of connected lender liability under section 75 that affords consumers (“debtors”) a right of recourse against lenders that provide the finance for the acquisition of goods or services from third-party merchants (“suppliers”) in the event that there is an actionable misrepresentation and/or breach of contract by the supplier. Certain conditions must be met if the protection afforded to consumers is engaged, including, for instance, the cash price of the purchase and the nature of the arrangements between the parties involved in the transaction. The Lender doesn’t dispute that the relevant conditions are met. But for reasons I’ll come on to below, it isn’t necessary to make any formal findings on them here. It was said in the Letter of Complaint that Fractional Club membership had been misrepresented by the Supplier at the Times of Sale because Mr and Mrs C were told or led to believe by the Supplier that Fractional Club membership: (1) was an investment and of some substance and could be sold at a considerable profit when that was not true. (2) was exclusive to them (and other members) when that was not true. In response to my provisional decision, the PR argues that Fractional Club membership was worthless and, as such, the following representations by the Supplier were fraudulent: (1) Mr and Mrs C would own a genuine share of a real property; (2) Fractional Club membership was a sound financial investment; (3) The Allocated Property would be sold; and (4) They would receive a share of the net sales proceeds of sale when the Allocated Property is sold. The PR takes that view because it says there is no evidence suggests that Mr and Mrs C own a share of any real property, the Lender hasn’t provided any evidence that the Allocated Property exists or that it will sell in the future (making it unlikely that Mr and Mrs C will receive anything from their share in it) and, (3) by the PR’s own calculations, given the initial and ongoing costs of Fractional Club membership, it was never possible to make a profit from the sale of the Allocated Property. The law relating to misrepresentation is a combination of the common law, equity and statute – though, as I understand it, the Misrepresentation Act 1967 didn’t alter the rules as to what constitutes an effective misrepresentation. Summarising the relevant pages in Chitty on Contracts, a material and actionable misrepresentation is an untrue statement of existing fact or law made by one party (or his agent for the purposes of passing on the representation, acting within the scope of his authority) to another party that induced that party to enter into a contract. 1 As approved by the Supreme Court in Smith v. The Royal Bank of Scotland plc [2023] UKSC 34 – see paragraph 40.

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However, a mere statement of opinion, rather than fact or law, which proves to be unfounded, isn’t a misrepresentation unless the opinion amounts to a statement of fact and it can be proved that the person who gave it did not hold it or could not reasonably have held it. It also needs to be shown that the other party understood and relied on the implied factual misrepresentation. Telling prospective members that they were investing their money because they were buying a fraction or share of one of the Supplier’s properties was not untrue – nor was it untrue to tell prospective members that they would receive some money when the allocated property is sold. After all, Mr and Mrs C’s share in the Allocated Properties clearly constituted an investment as it offered them the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But as the PR knows, while the term “investment” is not defined in the Timeshare Regulations, it was agreed by the parties in Shawbrook & BPF v FOS 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” (see paragraph 56). Yet, contrary to what the PR says, none of the contractual paperwork made any promises that a profit might be made. As I said in my provisional decision, the Supplier’s training material left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s possible that Fractional Club membership was marketed and sold to Mr and Mrs C as an investment orally. Mr and Mrs C say little about what was said, by whom and in what circumstances for the purposes of determining whether representations by the Supplier amounted to false statements of existing fact rather than expressions of honestly held opinions about the likely value of the Allocated Properties in the future. And while the PR’s own calculations might cast some doubt over the likelihood of the Allocated Properties being sold at a profit given the initial and ongoing costs of it to Mr and Mrs C, there isn’t enough evidence to persuade me that the relevant sales representative(s) would have carried out that sort of calculation at the Times of Sale or would otherwise have had information that would indicate that they knew or ought reasonably to have known at the time that any such representations weren’t true. And while the PR might question the exact legal mechanism used to give prospective members an interest in the Allocated Properties, that does not change the fact that the shares of members (like Mr and Mrs C) were clearly the purchase of a share of the net sale proceeds of a specific property in a specific resort. I’m not persuaded, therefore, by the allegations of fraudulent misrepresentation from the PR. And with that being the case, they too aren’t reasons to uphold this complaint and direct the Lender to compensate Mr and Mrs C. However, telling prospective members that they were investing their money because they were buying a fraction or share of one of the Supplier’s properties was not untrue. After all, a share in an allocated property was, by its very nature, an investment. And as such, it was possible that it might be sold at a profit. Regarding the lack of exclusivity of the accommodation, the contemporaneous documents I’ve seen relating to the other accommodation available through the membership, do not say

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that the resorts in the Supplier’s portfolio were exclusive to members. Resorts owned by the Supplier were described as “mixed use”, while other resorts were described as resorts in which the Supplier had “secured accommodation…under its control” or which were “available through [our] partnerships with other resorts”. None of this appears to state or imply that the resorts within the portfolio could only be booked by members. While I’ve no doubt the Supplier would have taken the opportunity to promote the quality of its resorts and services, I’ve not seen evidence that it made specific false statements about them. And as there isn’t enough evidence on file to support the PR’s allegation that Fractional Club membership had been misrepresented for the reasons raised, I’m not persuaded that there were representations by the Supplier on the issues in question that constituted false statements of existing fact. So, while I recognise that Mr and Mrs C and the PR have concerns about the way in which Fractional Club membership was sold by the Supplier, when looking at the claim under Section 75 of the CCA, I can only consider whether there was a factual and material misrepresentation by the Supplier. For the reasons I’ve set out above, I’m not persuaded that there was. And that means that I don’t think that the Lender acted unreasonably or unfairly when it dealt with this particular Section 75 claim. Section 75 of the CCA: the Supplier’s Breach of Contract I have already summarised how Section 75 of the CCA works and why it gives consumers a right of recourse against a lender. So, it is not necessary to repeat that here other than to say that, if I find that the Supplier is liable for having breached the Purchase Agreements, the Lender is also liable. The PR says, on Mr and Mrs C’s behalf, that the seller had ceased to trade and had committed a repudiatory breach of contract. I can see that certain parts of the Supplier’s business were put into administration. And I can understand why the PR is alleging that there was a breach of the Purchase Agreements as a result. However, neither Mr and Mrs C nor the PR have said, suggested or provided evidence to demonstrate that they are no longer: 1. members of the Fractional Club; 2. able to use their Fractional Club membership to holiday in the same way they could initially; and 3. entitled to a share in the net sales proceeds of the Allocated Property when their Fractional Club membership ends. Section 140A of the CCA: did the Lender participate in one or more unfair credit relationships? I’ve already explained why I’m not persuaded that Fractional Club membership was actionably misrepresented by the Supplier at the Times of Sale. But there are other aspects of the sales processes that, being the subject of dissatisfaction, I must explore with Section 140A in mind if I’m to consider this complaint in full – which is what I’ve done next. The PR says, for instance, that: 1. the right checks weren’t carried out before the Lender lent to Mr and Mrs C; 2. Mr and Mrs C were pressured by the Supplier into purchasing Fractional Club membership at the Times of Sale;

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3. there was one or more unfair contract terms in the Purchase Agreements; and 4. Fractional Club membership was marketed and sold as an investment in breach of a prohibition on doing so. However, having considered the entirety of the credit relationships between Mr and Mrs C and the Lender along with all of the circumstances of the complaint, I still don’t think the credit relationships 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 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. The commission arrangements between the Lender and the Supplier at the Times 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 Times of Sale; 5. The inherent probabilities of the sales given their 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 relationships between Mr and Mrs C and the Lender. The Supplier’s sales & marketing practices at the Times of Sale While the PR says that the right affordability checks weren’t carried out at the Times 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 and Mrs C was actually unaffordable before also concluding that they lost out as a result and then consider whether the credit relationship with the Lender was unfair to them for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr and Mrs C. I acknowledge that Mr and Mrs C may have felt weary after sales processes that went on for a long time. But they say little about what was said and/or done by the Supplier during their sales presentations 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 those times. Moreover, they did go on to upgrade their membership in 2017 – which I find difficult to understand if the reason they went ahead with the original purchase in 2016, was because they were pressured into it. And with all of that being the case, there is insufficient evidence to demonstrate that Mr and Mrs C made the decisions to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. Overall, therefore, I still don’t think that Mr and Mrs C’s credit relationships with the Lender were 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 relationships with the Lender were unfair to them. And that’s the suggestion that Fractional Club membership was marketed and sold to them as an investment in breach of the prohibition against selling timeshares in that way.

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The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations Shares in the Allocated Properties clearly constituted investments as they offered Mr and Mrs C 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 and Mrs C as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to them as an investment, i.e. told them or led them to believe that Fractional Club membership offered them the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Times 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 and Mrs C, the financial value of their share in the net sales proceeds of the Allocated Properties 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 and Mrs C 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, I remain of the opinion that it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. The PR disagrees with what I’ve said and cites the judgment of Mrs Justice Collins Rice in Shawbrook & BPF v FOS in support – and appears to be 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

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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. […] […] 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 credit relationships between Mr and Mrs C 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 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. Were the credit relationships between the Lender and Mr and Mrs C rendered unfair? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Times of Sale, I now need to consider what impact such breaches had on the fairness of the credit relationships between Mr and Mrs C and the Lender under the Credit Agreements and related Purchase Agreements, 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 credit relationships between Mr and Mrs C and the Lender that were unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led them to

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enter into the Purchase Agreements and the Credit Agreements is an important consideration. When the complaint was referred to this service, the PR provided a lot of documentation in support of the complaint. And contrary to what the PR has said in response to my PD, I did accept in the PD that the letter of complaint to the Lender refers to the Fractional Club membership being positioned to Mr and Mrs C as an investment that would provide a profit. So, it is wrong to suggest that I didn’t say that. And I confirm my acceptance of that. Mr and Mrs C have provided a statement of their recollections of the sale in support of the complaint. And in my PD, I explained that I had a number of concerns regarding it. I’ll explain why. Firstly, I’ve noted it was provided more than six years after the sales complained about, and after the case of Shawbrook v FOS, a case which highlighted the potential significance of breaches of Regulation 14(3). And I remain concerned that it wasn’t provided with the supporting documentation from the PR when the complaint was originally referred to this service in October 2020. In December 2023 (which was several months after the judgement had been issued in Shawbrook v FOS, the PR provided a bundle of documents to the Lender and to this service, which included a statement that hadn’t been provided with the original supporting documents. And in its covering e-mail to the Lender and this Service, it said: “We are aware that any decision in this matter will be predicated on a statement from Our Clients as to how the fractional timeshare product was marketed to them. Please find attached a statement from Our Clients confirming what they were advised of.” In its response to my PD, the PR acknowledged that statement was drafted by Mr and Mrs C in October 2023. So, I still think it is possible that what Mr and Mrs C have said in their statement was influenced in some way by the outcome of the judicial review. And, as a result, I still think this all limits the weight I can reasonably apply to Mr and Mrs C’s statement. I have however considered what Mr and Mrs C have said in their statement. And even if I didn’t have the concerns that I have summarised in the paragraph above, I’m still not persuaded by what Mr and Mrs C have said in respect of any breach of Regulation 14(3). I say this because the statement provides very little information about how the Fractional Club membership was positioned by the Supplier in the presentations Mr and Mrs C attended, which makes it difficult for me to understand what they were told during the presentations, and the context in which any information was provided. I’ve also noted that whilst there is a mention of the Fractional Club membership being positioned as an investment in the complaint to the Lender, and in the statement, which references profits to be shared with the other investors; there is no such reference to this on the complaint form setting out the complaint made to this Service. And it seems to me that in the complaint form, the focus of the PR’s concerns on behalf of Mr and Mrs C, relate to the disclosure of commission payments, the affordability of the loan, the commission it says the Lender paid, and the alleged high-pressure sales presentation. And I’m surprised that the statement doesn’t comment on the other points of complaint which have been raised and focuses on the investment point. So, notwithstanding the submissions made by the PR, this also suggests to me that its focus on that point and the timing of its disclosure, may have been influenced by the outcome of the judicial review.

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The PR has set out that the overall cost of the Fractional Club membership, when taking into account the cost of the credit and the annual maintenance fees over its duration, was actually in excess of £59,845. And it says in essence that the unlikelihood of the property being sold for a mathematically impossible sum, means the product has no intrinsic value. And it went on to say that the gross imbalance in the financial realities of the contract renders the relationship fundamentally unfair under section 140A of the Consumer Credit Act 1974. But I don’t agree with the PR here. I’ve addressed this point above, but it also seems likely that Mr and Mrs C were aware, at the Times of Sale, of the cost of the Fractional Club membership, the interest they were being charged, as well as that they needed to pay maintenance fees every year and the cost of those fees in the first year. So, I’m satisfied that they would have been aware from the information provided to them of the overall costs of purchasing their Fractional Club memberships. Consequently, 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 and Mrs C decided to go ahead with their purchases. And for the reasons I’ve already outlined, I don’t think I can apply much weight to the little they have said about the sales. That doesn’t mean they weren’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 Mr and Mrs C themselves don’t persuade me that their purchases were motivated by their shares in the Allocated Properties and the possibility of a profit, I don’t think breaches of Regulation 14(3) by the Supplier were likely to have been material to the decisions Mr and Mrs C ultimately made. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr and Mrs C’s decisions to purchase Fractional Club membership at the Times of Sale were 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 purchases whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationships between Mr and Mrs C and the Lender were unfair to them even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Times of Sale The PR seems to be saying, that in essence, Mr and Mrs C were not given sufficient information at the Times of Sale by the Supplier. As I’ve already indicated, the case law on Section 140A makes it clear that it does not automatically follow that regulatory breaches create unfairness for the purposes of the unfair relationship provisions. The extent to which such mistakes render a credit relationship unfair must also be determined according to their impact on the complainant. I acknowledge that it is also possible that the Supplier did not give Mr and Mrs C sufficient information, in good time, on the various matters, in order to satisfy the requirements of Regulation 12 of the 2010 Timeshare Regulations (which was concerned with the provision of ‘key information’). In response to my provisional decision, the PR also argues that the Supplier breached Regulation 12 of the Timeshare Regulations because the fractional rights certificate simply references an allocated property, which is entirely insufficient to prove a genuine, legally secured property interest. Moreover, it also says there is no independent valuation of this

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property, no detailed description of the asset, and no evidence that a mechanism exists to ensure it will ever be sold on the open market. However, it isn’t clear what the PR means by “a legally secured property interest” and it has provided no authority for the suggestion the Supplier had to provide Mr and Mrs C with information the information it has referred to. What’s more, when it comes to the market value of the Allocated Property, I would draw the PR’s attention to what Mrs Justice Collins Rice said in paragraphs 106 and 110 of her judgment in Shawbrook & BPF v FOS: “Both ombudsmen rely on the reference in Sch.1 to 'exact nature and content of the rights' as being the basis for perceiving a legal obligation to provide 'value' information. But first, having regard to the high level of specificity in the Schedule, it is obvious that 'value' information is nowhere specified as such. And second, 'exact nature and content of the rights' is clearly intended, in context, to be a fair and objective identification and description of those rights. 'Value' information may possibly be context for, or commentary on, those rights, but the 'exact nature and content of rights' is something different from information which may (or may not) be relevant to how much they might be worth, now or in the future.” “I do not, and do not need to, go so far as to infer from the Regulations a legal prohibition on the provision of valuation information. My conclusion is that there is no legal obligation, derivable from Reg.12 of the Timeshare Regulations, to provide it, and that the ombudsmen's solution is, in its own terms, distinctly problematic for the regulatory framework. It remains my view that the principal legal consumer-protection control over buying and selling fractional ownership timeshares is the Reg.14(3) prohibition. That provision alone makes it hard enough to market a timeshare product containing a bare interest in the proceeds of the deferred sale of real property lawfully, without inviting the fleshing out of the law as positively demanding investor-protection information obligations at the same time.” (My emphasis added) In any event, as I’ve already indicated, the case law on Section 140A makes it clear that it does not automatically follow that regulatory breaches create unfairness for the purposes of the unfair relationship provisions. The extent to which such mistakes render a credit relationship unfair must also be determined according to their impact on the complainant. So, even if it could be said that the Supplier failed to give Mr and Mrs C sufficient information, in good time, in order to satisfy the requirements of Regulation 12 of the Timeshare Regulations for some of the reasons the PR gives, neither they nor the PR have persuaded me that they were deprived of information that would have led them to make a different purchasing decision at the Times of Sale when I’ve already found that the prospect of a financial gain from the Allocated Properties was not an important and motivating factor behind their purchases. And with that being the case, even if there were information failings (which I make no formal finding on), I can’t see why that could be said to have rendered the credit relationship in question unfair to them. The PR has also raised concerns that the lack of provision of information about the commission paid by the Lender to the Supplier. It believes this led to an unfair relationship between Mr and Mrs C and the Lender. So, I have also considered this issue. 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’).

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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: 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 and Mrs C 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 and Mrs C, 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 and Mrs C 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

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relevant regulatory guidance at the Times of Sale, it is for the reasons set out below that I remain of the opinion that any such failure is itself a reason to find the credit relationship in question unfair to Mr and Mrs C. 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 and Mrs C entered into wasn’t high. At £909.20, 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 Times of Sale that the Supplier was going to be paid a flat rate of commission at that level, I’m still not 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 and Mrs C 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 still think they would have taken out the loans to fund their purchases at the Times of Sale had the amount of commission been disclosed. What’s more, based on what I’ve seen, 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 and Mrs C but as the supplier of contractual rights they 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 them when arranging the Credit Agreements and thus a fiduciary duty. The PR has said that it’s been denied the opportunity to review the commercial agreement or the ledger that produced the commission figure. And that as a result they cannot verify if the respondent paid other forms of remuneration, such as volume bonuses or marketing contributions, which would materially increase the true level of commission. It’s also said the reliance on undisclosed evidence and untested assertions constitutes a severe procedural failing and prevents a fair assessment of the relationship under section 140A of the Consumer Credit Act 1974. I don’t agree and I’ll explain why: I can confirm that this service has, in addition to the details of the commission paid by the Lender, has also been provided with other information and documentation by the Lender, including those in respect of any commercial arrangements between it and the Supplier. And that the information was provided in confidence on the basis it is commercially sensitive. I’m satisfied that in line with the authority provided to me by DISP 3.5.9, it's appropriate for me in this case, to accept the evidence provided by the Lender in relation to commission, in confidence. And what I’ve said above in relation to commission includes a summary of the information provided. Overall, therefore, I remain unpersuaded 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 Mr and Mrs C. 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 and Mrs C and the Lender under the Credit Agreement and related Purchase Agreement was unfair to them. And I don’t think it would be fair or reasonable that I uphold this complaint on that basis.

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Commission: The Alternative Grounds of Complaint While I’ve found that Mr and Mrs C’s 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 and Mrs C's 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 and Mrs C (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 Mr and Mrs C 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 loan to fund his purchase at the Times of Sale had there been more adequate disclosure of the commission arrangements that applied at that time. Overall Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that the Lender acted unfairly or unreasonably when it dealt with Mr and Mrs C’s Section 75 claims. I am not persuaded that the Lender was party to a credit relationship with them under the Credit Agreements and related Purchase Agreements that were unfair to them for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate them. My final decision For the reasons set out above, my decision is to not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs C and Mr C to accept or reject my decision before 26 May 2026. Simon Dibble Ombudsman

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