DRN-6305890

The complaint Mr F says Clydesdale Financial Services Limited, trading as Barclays Partner Finance (‘BPF’) has unfairly declined his claim under section 75 of the Consumer Credit Act 1974 (‘CCA’). And he says his creditor-debtor relationship with BPF was unfair to him under section 140A of the CCA. What happened I issued my provisional decision to both parties explaining why I thought Mr F’s complaint shouldn’t be upheld and invited both parties to provide any further evidence and / or submissions in reply. The background to this complaint was set out in my provisional decision together with my provisional findings which are both copied below and now form part of this final decision. Background In January 2012, Mr F purchased a timeshare membership – which I’ll call ‘Fractional Club membership’ – from a timeshare provider (the ‘Supplier’). The membership was asset backed – which means it gave Mr F more than just holiday rights. It included a share of the net sale proceeds of a property named on the purchase agreement (the ‘Allocated Property’) after the membership term ended. Mr F ‘traded-in’ an existing trial timeshare membership, which left £16,699 to pay. Mr F borrowed the full amount from BPF to pay for it. In June 2021, Mr F – using a professional representative (‘PR’) – wrote to BPF (the ‘Letter of Claim’) to make a claim under sections 75 and 140A of the CCA. Specifically, the Letter of Claim said: ▪ The way the Supplier sold the Fractional Club membership to Mr F was prohibited by the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (the ‘Timeshare Regulations’). ▪ Mr F was subject to a ‘high pressure’ sale that lasted several hours; the Supplier refused to accept ‘no’; Mr F was told the offer was only available for a limited time; and, Mr F was misled about the benefits of membership. ▪ The Supplier misrepresented the membership by saying: the timeshare was an investment; and it misled Mr F about the exclusivity of its resorts. The PR also requested details of any commission paid by BPF to the Supplier. BPF dealt with the Letter of Claim as a complaint and issued its final response letter on 15 March 2023. It rejected the complaint on every ground. Mr F’s PR then referred the complaint to our service. One of our investigators rejected the complaint on its merits. The PR has asked that an ombudsman make a final decision.

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The legal and regulatory context When considering what is, in my opinion, fair and reasonable in all the circumstances of the complaint, I’m required by DISP 3.6.3R of the Financial Conduct Authority (‘FCA’) Handbook to take into account: ‘(1) relevant: (a) law and regulations; (b) regulators’ rules, guidance and standards; (c) codes of practice; and (2) ([when] appropriate) what [I consider] to have been good industry practice at the relevant time.’ The legal and regulatory context that’s relevant to this complaint is, in many ways, no different to that shared in several hundred decisions by ombudsmen on very similar complaints – which can be found on our website. I therefore don’t think it’s necessary to set out that context in detail here. But I’d add that the following regulatory rules/guidance are also relevant: The Office of Fair Trading’s Irresponsible Lending Guidance – 31 March 2010 The primary purpose of this guidance was to provide greater clarity for businesses and consumer representatives as to the business practices that the Office of Fair Trading (the ‘OFT’) thought might have constituted irresponsible lending for the purposes of Section 25(2B) of the CCA. Below are the most relevant paragraphs as they were at the relevant time: ▪ Paragraph 2.2 ▪ Paragraph 2.3 ▪ Paragraph 5.5 The OFT’s Guidance for Credit Brokers and Intermediaries – 24 November 2011 The primary purpose of this guidance was to provide clarity for credit brokers and credit intermediaries as to the standards expected of them by the OFT when they dealt with actual or prospective borrowers. Below are the most relevant paragraphs as they were at the relevant time: ▪ Paragraph 2.2 ▪ Paragraph 3.7 ▪ Paragraph 4.8 What I’ve provisionally 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. I’m not currently minded to uphold this complaint. Before I explain why, I want to make it clear that my role as an ombudsman isn’t to address every single point that’s been made to date – it’s to decide what’s fair and reasonable in the circumstances of this complaint. So if I haven’t commented on, or referred to, something that either party has said, it doesn’t mean I haven’t considered it.

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Section 75 Section 75 of the CCA protects consumers who buy goods and services on credit. It says, if certain conditions are met, that the finance provider is legally answerable for any misrepresentation or breach of contract by the supplier. A misrepresentation is an untrue statement made by one party to another that induces that party to enter into a contract. In the Letter of Claim, the PR says the Supplier : ▪ the timeshare was an investment; and ▪ the resort was exclusive to members. However, the PR hasn’t provided any first-hand testimony from Mr F or any other evidence to support either allegation. Essentially, they’re bare allegations. As alleged, I can’t discern an actionable misrepresentation (or breach of contract). As there isn’t any evidence that Fractional Club membership was misrepresented in the way alleged, I don’t think it was. Moreover, Mr F first notified BPF of his Section 75 claim in June 2021 and as more than six years had passed between the Time of Sale and when that claim was first put to BPF, I don’t think it was unfair or unreasonable of BPF to rely on the Limitation Act 1980 to reject Mr F’s concerns about the Supplier’s alleged misrepresentations. Section 140A Section 140A says a court may make an order if it thinks the relationship between a creditor and a debtor is unfair to the debtor. It’s deliberately framed in wide terms, and a finding of unfairness can flow from something done on the creditor’s behalf in connection with a ‘related agreement’. Here, the purchase agreement is a ‘related agreement’. And, by virtue of section 56 of the CCA, BPF is legally answerable for the Supplier’s actions. Having considered the entirety of the relationship, I don’t think it was unfair for the purposes of section 140A. In reaching this conclusion, I’ve considered: ▪ The standard of the Supplier’s commercial conduct, which includes its sales and marketing practices at the time of sale, and any relevant training material. ▪ The information provided by the Supplier at the time of sale, including the contracts and any disclaimers made by the Supplier. ▪ The commission arrangements between BPF and the Supplier at the time of sale and the disclosure of those arrangements. ▪ All the evidence provided by both parties on what was supposedly said and/or done at the time of sale. ▪ The inherent probabilities of what’s likely to have happened given the circumstances of each sale. The Supplier’s sales and marketing practices at the time of sale There are several reasons why Mr F says his creditor-debtor relationship with BPF was unfair to him. The PR says Mr F was subject to a long, ‘high pressure’ sale and the Supplier refused to accept ‘no’. Neither side has provided any evidence to support their submissions. And I’m mindful that Mr F was given a 14- day cooling off period and he hasn’t provided a credible explanation for why he didn’t cancel the membership. Moreover, he did later go on to upgrade his Fractional Club membership – which I find difficult to understand if the reason he went ahead with the purchase in question was

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because he was pressured into it. And with all of that being the case, there is insufficient evidence to demonstrate that Mr F made the decision to purchase the Fractional Club membership because his ability to exercise that choice was significantly impaired by pressure from the Supplier. Overall, therefore, I don’t think that Mr F’s credit relationship with BPF was rendered unfair to him under section 140A for the reason above. But there is another reason, perhaps the main reason, why the PR now says his credit relationship with BPF was unfair to him. And that’s the suggestion that Fractional Club membership was marketed and sold to him as an investment in breach of the prohibition against selling timeshares in that way. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations A share in the Allocated Property clearly constituted an investment as they offered Mr F the prospect of a financial return – whether or not, like all investments, that was more than what he 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 F as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to them as an investment, i.e. told him or led him to believe that Fractional Club membership offered him the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. I accept that it’s possible that Fractional Club membership was marketed and sold to Mr F as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Was the credit relationship between BPF and Mr F rendered unfair? Even if the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I need to consider what impact that breach had on the fairness of the credit relationship between Mr F and BPF 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 F and BPF that were unfair to him and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led him to enter into the Purchase Agreement and the Credit Agreement is an important consideration. Here, I’m hindered in assessing the strength of the PR’s submissions by not having any detail as to what Mr F was told and the context in which any information was provided to them during the sales process. There is no testimony from Mr F that explains in his own words what he was told about the Fractional Club membership, and how that impacted his

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decision to purchase it. And it’s not clear to me what, if anything, he was told about how he would make a financial gain/profit from it. Whilst I can’t rule out the possibility that Mr F may have been interested in a share in the Allocated Property, on my reading of the evidence before me, I’m unable to conclude that the prospect of a financial gain from Fractional Club membership was an important and motivating factor when Mr F decided to go ahead with the purchase. And I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision he ultimately made. It follows, I do not think the credit relationship between Mr F and BPF was unfair to him even if the Supplier had breached Regulation 14(3). Mr F’s Commission Complaint The PR says that a payment of commission from BPF 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 BPF and Mr Johnson was unfair under Section 140A of the CCA because of the commission paid by BPF 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 BPF. 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

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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 F in arguing that his credit relationship with BPF was unfair to him for reasons relating to commission given the facts and circumstances of this complaint. I haven’t seen anything to suggest that BPF and Supplier were tied to one another contractually or commercially in a way that wasn’t properly disclosed to Mr F, 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 F into a credit agreement that cost disproportionately more than it otherwise could have. I acknowledge that it’s possible that BPF 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 BPF 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 F. In stark contrast to the facts of Mr Johnson’s case, the amount of commission paid by BPF to the Supplier for arranging the Credit Agreement that Mr F entered into wasn’t high. At £1,366, it was only 6.74% of the amount borrowed and even less than that (3.98%) as a proportion of the charge for credit1. So, had he 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 he either wouldn’t have understood that or would have otherwise questioned the size of the payment at that time. After all, Mr F wanted Fractional Club membership and had no obvious means of his own to pay for it. And at such a low level, the impact of commission on the cost of the credit he needed for a timeshare he wanted doesn’t strike me as disproportionate. So, I think he would still have taken out the loan to fund his 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 F but as the supplier of contractual rights he 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 him when arranging the Credit Agreement and thus a fiduciary duty. 1 The Credit Agreement in question consolidated the loan Mr F took with BPF to fund his Trial membership and as such, it is a related agreement. So I must also consider whether the commission arrangement for that sale has led to any unfairness being carried over into his new loan. At £80.30, it was only 2% of the amount borrowed and so I don’t think this payment of commission created an ongoing unfairness for the same reasons I give for Mr F’s purchase of Fractional Club membership.

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Overall, therefore, I’m not currently persuaded that the commission arrangements between the Supplier and BPF were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to Mr F. 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 F and BPF under the Credit Agreement and related Purchase Agreement was unfair to him. And as things currently stand, I don’t think it would be fair or reasonable that I uphold this complaint on that basis. Responses to my provisional decision BPF responded to the provisional decision and accepted it. The PR also responded to the provisional decision, they did not accept the provisional decision and provided some further comments and evidence they wish to be considered. The deadline to receive responses from the parties has now passed, so I’m finalising my decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Following the responses from both parties, I’ve considered the case afresh and having done so, I’ve reached the same decision as that which I outlined in my provisional findings, for broadly the same reasons. Again, my role as an Ombudsman isn’t to address every single point which has been made to date, but to decide what is fair and reasonable in the circumstances of this complaint. If I haven’t commented on, or referred to, something that either party has said, this doesn’t mean I haven’t considered it. Rather, I’ve focused here on addressing what I consider to be the key issues in deciding this complaint and explaining the reasons for reaching my final decision. The PR’s further comments in response to the provisional decision only relate to the issue of whether the credit relationship between Mr F and BPF was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Mr F as an investment at the Time of Sale. As outlined in my provisional decision, the PR originally raised various other points of complaint, all of which I addressed at that time. But they didn’t make any further comments in relation to those in their response to my provisional decision. Indeed, they haven’t said they disagree with any of my provisional conclusions in relation to those other points. And since I haven’t been provided with anything more in relation to those other points by either party, I see no reason to change my conclusions in relation to them as set out in my provisional decision. So, I’ll focus here on the PR’s points raised in response. In my provisional decision I explained that I thought it was possible that Fractional Club membership was marketed and sold to Mr F as an investment in breach of Regulation 14(3). I went on to explain that whether there had been a breach of the relevant prohibition by the

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Supplier was not ultimately determinative of the outcome in this complaint. This was because I didn’t think the prospect of a financial gain from Fractional Club membership was an important and motivating factor when Mr F decided to go ahead with the purchase. In response to my provisional decision, the PR has provided a questionnaire that appears to have been completed by Mr F for the PR ahead of his complaint to BPF in 2020. Below, I’ve included the handwritten responses to the questions about investment: ‘Did the sales representative tell you the purchase was an asset that could be sold? Was it described to you as an investment? – Yes, an investment that can grow and be sold on [in] future back to the company or onto another person. Was the timeshare described to you as an investment? – Yes’ The questions are obviously leading. Even if I set aside my concern here, the ‘testimony’ itself isn’t particularly compelling. I accept that Mr F says the word ‘investment’ was used – in response to a clear prompt from the PR – but he doesn’t say more or suggest that he was told he would or could make a profit. And he certainly doesn’t say, nor could I infer from any of their answers, that the prospect of a financial gain was an important and motivating factor behind his decision to purchase. Nor do Mr F’s later actions suggest he saw it as an investment. He simply relinquished his Fractional Club membership in 2016 due to a change of circumstances. And when he contacted BFF himself in 2017 to complain that the Fractional Club membership was mis- sold, he didn’t mention the investment element at all. On balance, therefore, even if the Supplier marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I remain unconvinced that Mr F’s decision to purchase it at the Time of Sale was motivated by the prospect of a financial gain (i.e., a profit). And for that reason, I don’t think the credit relationship between Mr F and BFF was unfair to him even if the Supplier breached Regulation 14(3). Overall conclusion In conclusion, given the facts and circumstances of this complaint, I don’t think BPF acted unfairly when it declined Mr F’s section 75 claim. And I’m not persuaded that BPF was party to a credit relationship with him under the credit agreement and related purchase agreement that was unfair to him for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair to direct BPF to compensate Mr F. My final decision For the reasons set out above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr F to accept or reject my decision before 26 May 2026. Stefan Riedel

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Ombudsman

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