First Holiday Finance Ltd · DRN-6255868

The complaint Mr and Mrs M’s complaint is, in essence, that First Holiday Finance Ltd trading as FHF (the ‘Lender’, or ‘FHFL’) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with them under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying a claim under Section 75 of the CCA. What happened Mr and Mrs M were members of a timeshare provider (the ‘Supplier’) – having purchased a trial membership from it on 23 August 2018. But the product at the centre of this complaint is their membership of a timeshare that I’ll call the ‘Fractional Club’. Mr and Mrs M purchased 2260 fractional points for £30,532 on 8 August 2019 (the ‘Purchase Agreement’). Mr and Mrs M paid for this in part by means of trading in a trial membership they held, which was valued at £4,395, financing the balance by taking a loan of £25,637 (the ‘Credit Agreement’) and a £500 deposit. As this complaint is concerned with the purchase on 8 August 2019, that is the ‘Time of Sale’ for the purposes of my decision. The purchase of the trial membership is not included in this complaint, so I will not consider the merits of that purchase in this decision. Fractional Club membership was asset backed – which meant it gave Mr and Mrs M 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 Property’) after their membership term ends. Mr and Mrs M – using a professional representative (the ‘PR’) – wrote to the Lender on 24 August 2022 (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 and Mrs M concerns as a complaint and issued its final response letter on 6 September 2022 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 on its merits. The Lender disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me. I have reviewed and considered all the arguments and submissions made by PR and the Lender, including those made in response to our Investigator’s view.

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Having done so, I issued a provisional decision (the ‘PD’) dated 16 February 2026. In that decision, I said: “ I have considered all the available evidence and arguments to decide what is fair and reasonable in the circumstances of this complaint. And having done that, I agree with the Investigator and do not think this complaint should be upheld. I have, however, expanded upon the Investigator’s reasoning and so think it’s appropriate to give both parties the opportunity to comment before I issue my final decision. However, before I explain 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. 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 Time of Sale because Mr and Mrs M were: 1. Told that they had purchased an investment that would “considerably appreciate in value”. 2. Promised a considerable return on their investment because they were told that they would own a share in a property that would considerably increase in value. 3. Told that they could sell their Fractional Club membership to the Supplier or easily to third parties at a profit. 4. Made to believe that they would have access to “the holiday apartment” at any time all year round. However, neither points 1 nor 2 strike me as misrepresentations even if such representations had been made by the Supplier (which I make no formal finding on). 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. And even if the Supplier’s sales representatives went further and suggested that the share in question would increase in value, perhaps considerably so, that sounds like nothing more than a honestly held opinion as there isn’t any accompanying evidence to persuade me that the relevant sales representative(s) said something that, while an opinion, amounted to a statement of fact that they did not hold or could not have reasonably held. As for points 3 and 4, while it’s possible that Fractional Club membership was misrepresented at the Time of Sale for one or both of those reasons, I don’t think it’s probable. They’re given little to none of the colour or context necessary to demonstrating that the Supplier made false statements of existing fact and/or opinion. And as there isn’t any other evidence on file to support the suggestion that Fractional Club membership was misrepresented for these reasons, I don’t think it was.

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So, while I recognise that Mr and Mrs M 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 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 Time 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. Having considered the entirety of the credit relationships between Mr and Mrs M and the Lender along with all of the circumstances of the complaint, I 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 Time of Sale along with any relevant training material; 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 relevant credit relationships between Mr and Mrs M and the Lender. The Supplier’s sales & marketing practices at the Time of Sale Mr and Mrs M’s complaint about the Lender being party to unfair credit relationships was made for several reasons. The PR says, for instance, that the right checks weren’t carried out before the Lender lent to Mr and Mrs M. I haven’t seen anything to persuade me that was the case in this complaint given its circumstances. But even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied that the money lent to Mr and Mrs M was actually unaffordable before also concluding that they lost out as a result and then consider whether the credit relationships 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 M. Connected to this is the suggestion by the PR that the Credit Agreements were arranged by an unauthorised credit broker, the upshot of which is to suggest that the Lender wasn’t permitted to enforce the Credit Agreements. However, it looks to me like Mr and Mrs M 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 none of the lending looks like it was unaffordable for them, even if the

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one or more of the Credit Agreements were 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 and Mrs M’s financial loss – such that I can say that the credit relationships in question were 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 loans weren’t arranged properly. The PR also says that there was one or more unfair contract terms in the Purchase Agreements. But as I can’t see that any such terms were operated unfairly against Mr and Mrs M 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. I acknowledge that Mr and Mrs M 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 that time. And with all of that being the case, there is insufficient evidence to demonstrate that Mr and Mrs M made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. Overall, therefore, I don’t think that Mr and Mrs M credit relationships 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 relationships 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 and Mrs M’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 – saying, in summary, that Mr and Mrs M were told by the Supplier that Fractional Club membership was the type of investment that would only increase in value. 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. Shares in the Allocated Properties clearly constituted investments as they offered Mr and Mrs M 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

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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 M as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to 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 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 and Mrs M, 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 M 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. Were the credit relationships 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 such breaches had on the fairness of the credit relationships between Mr and Mrs M 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 M 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 enter into the Purchase Agreements and the Credit Agreements 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 and Mrs M decided to go ahead with their purchase.

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Mr and Mrs M provided a statement to PR, which was then forwarded to us. This was dated 8 April 2022. In its response to our Investigator’s view, the Lender expressed doubt that this was the case, but I have no evidence to contradict that it was produced at that time. Having said that, Mr and Mrs M purchased the fractional membership in August 2019, but didn’t complain until August 2022, around three years after the sale. They didn’t provide any of their own memories of the sale until April 2022, so approaching three years after the sale. The courts have long taken the position that memories fade and change over time and that being a part of a complaints process can also affect one’s memories. The statement is very detailed, and covers a number of purchases of Timeshare products and fractional memberships made by Mr and Mrs M from the Supplier since 2009. As I am only considering the facts surrounding this purchase, I have only considered the evidence provided as it relates to this one complaint, as well as any overall points they made. The majority of the statement, when referencing the circumstances of this complaint, concerned Mr and Mrs M’s experience of the sales process, together with their disappointment with their inability to take holidays using the fractional membership, owing to constraints such as work schedules and school holidays, compounded by the Covid pandemic limiting opportunities to travel during 2020. On the subject of the investment element of the membership, the statement made little reference to the role this played in Mr and Mrs M’s purchase decision, saying: “We were persuaded that with [fractional membership] we were investing in a physical asset and we would get our money back with profits at the end of the 19 years fixed term”.” At its conclusion, the statement makes a similar point, saying: “We were informed that the purchase price for our timeshare fractional ownership products would be an investment which would see a profit when the properties were sold in 19 years’ time. We were told that Spanish house prices had fluctuated over the last few years but generally they performed similar to the UK, doubling every 8-10 years. We were led to believe that we owned a fraction of the apartment, similar to a leasehold flat, which had a monetary resale value that could be recouped at the end of the term, we now understand that this timeshare has little or no value and is unlikely to be sold with repayment of our purchase price and profits as expected.” From this, I consider that Mr and Mrs M had an understanding of how the fractional membership gave them a share in the allocated property. I also consider that they had been made aware by the Supplier that the value of the fractional membership was linked to the value of the property and would rise and fall in line with this value. Importantly, when reviewing this complaint, I’ve noted that certain paragraphs of this statement are identical to those in other statements I have seen provided by other consumers in entirely different complaints. In particular, the paragraph (above) which describes Mr and Mrs M’s expectation of a profit from the purchase is one of these elements. I queried this with the PR, who contacted Mr and Mrs M. They did not explain the similarity with other complaints, but stated that they felt that it accurately described their experience.

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Having considered these points, I have to conclude that at least some of Mr and Mrs M’s statement is not their own recollections in their own words, but are words they were given to say by someone else. I note that the PR has said Mr and Mrs M felt that these words accurately reflected their own experience. But in cases like this, it’s important to have a consumer’s own recollections, in their own words not only in relation to what they recall happened but also in relation to what their own motivations were in making their purchase. I have to conclude that the appearance of the paragraph in question – and the lack of an explanation - undermines the reliability of the evidence provided, as there is no credible explanation of how this text is identical to those in other, unrelated, complaints I have seen if it was not provided to Mr and Mrs M by someone else. This means that I’m not persuaded that I can give those 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. However, as set out above, if they have anything further they wish for me to consider on this point, they can let me know in response to this decision. But based on the existing evidence presented to me, I simply can’t say that any positioning of Fractional Club membership by the Supplier as an investment was a factor in their purchasing decision. 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 M 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 M 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 M ‘s decision to purchase Fractional Club membership at the Time 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 M and the Lender were unfair to them even if the Supplier had breached Regulation 14(3). The Supplier’s liquidation procedure and the applicability of Spanish Law on the Credit Agreement The PR has indicated that any amounts that may be awarded in compensation against the Supplier as a result of action in a Spanish Court may not be recoverable owing to the liquidation of the Supplier’s sales companies. I am unconvinced that the liquidation of these companies has any bearing on the merits of the complaint against the Lender. Furthermore, I can’t see that the Lender has been party to any court proceedings in Spain. Given that, and also noting that the Purchase Agreement is governed by English law, it isn’t at all clear to me that Spanish law would be held relevant if the validity of the Purchase Agreement were litigated between its parties and the Lender in an English court. For example, in Diamond Resorts Europe and Others (Case C-632/21), the European Court of Justice ruled that, because the claimant lived in England and the timeshare contract governed by English law, it was English law that applied, not Spanish. Overall, therefore, in the absence of a successful English court ruling on a timeshare case paid for using a point-of-sale loan on similar facts to this complaint, and given the facts and

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circumstances of this complaint, I’m not persuaded that it would be fair or reasonable to consider the liquidation of any of the Supplier’s sales companies is relevant to this complaint. Conclusion In conclusion, as things currently stand, I do not think that the Lender acted unfairly or unreasonably when it dealt with the relevant Section 75 claim, and I am not persuaded that the Lender was party to credit relationships with Mr and Mrs M under the Credit Agreements that were unfair to them for the purposes of Section 140A of the CCA – nor do I see any other reason why it would be fair or reasonable to direct the Lender to compensate them.“ The Lender responded to the provisional decision and accepted it. The PR disagreed and asked for a final decision to be made. 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, in many ways. no different to that shared in several hundred published ombudsman decisions on very similar complaints – which can be found on the Financial Ombudsman Service’s website. And with that being the case, it is not necessary to set out that context in detail here. But I would add that the following regulatory rules/guidance are also relevant: The 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

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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 PD in the main relate to the issue of whether the credit relationship between Mr and Mrs M and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Mr and Mrs M as an investment at the Time of Sale. They also disagreed with my view that the inclusion of information in their statement that is identical to that provided by other consumers in other complaints should not render the whole statement unreliable. Mr and Mrs M have provided no explanation for the inclusion of this information, but the PR suggested that it may be that they had relied upon a third-party provided template as English was not their first language and that this should be taken into account. They suggested that I should recognise “limited English proficiency as a vulnerable characteristic”. They also argued for the first time that the payment of a commission by the Lender to the Supplier led to an unfair credit relationship. The PR has also continued to argue that the Purchase Agreement is unlawful under Spanish law and therefore it should be treated as rescinded. 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. 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 I have thought carefully about what the PR has said that the appearance of text in the witness statement that was identical to that which also appears in the statements of other consumers should not render the whole statement unreliable, but on balance, I don’t agree. I’ll explain my rational here in some more detail. Firstly, the text that was included from the third party related directly to Mr and Mrs M’s contention that the membership was sold to them as an investment and explicitly supported their expectation that that they had an expectation, rather than a prospect, of a profit at the end of the contract. This was a fundamental part of their argument that the credit relationship was unfair to them. So, if I were to consider only this part of the statement to be unreliable, that fact alone would considerably weaken Mr and Mrs M’s argument that the expectation of

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a profit was an important factor in their decision to purchase the membership. I also have to consider that the statement was presented in such a way as to give the impression that it had been written entirely by Mr and Mrs M. That this should prove not to be the case in such an important respect must lead to a query to the extent to which other parts of the statement may have been influenced by a third party. I have also considered that the fact that English is not the first language of Mr and Mrs M and may have caused a limitation to their ability to express their experiences of their relationship with the Supplier. I have to note that this is the first time that this has been raised by the PR and I accept that it is possible that this may be an issue for them. This does not explain, however, the inclusion of identical paragraphs to those which appear in statements made by other consumers in relation to other, entirely unrelated, complaints. And so, on balance, for the above reasons, along with those I already explained in my PD, I remain unpersuaded that any breach of Regulation 14(3) was material to Mr and Mrs M’s purchasing decision. The PR also said that in the judgment handed down in Shawbrook & BPF v FOS, it was not challenged that the product in question was marketed and sold as an investment. But, as I explained in my provisional decision, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. And the judgment referred to did not make a blanket finding that all such products were mis-sold in the way the PR appears to be suggesting. Any complaint needs to be considered in the light of its specific circumstances. So, 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 and Mrs M’s decision to make the purchase was motivated by the prospect of a financial gain. So, I still don’t think the credit relationship between Mr and Mrs M and the Lender was unfair to them for this reason. The provision of information by the Supplier at the Time of Sale The PR said in response to my provisional decision 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 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

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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 M 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. 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 and Mrs M. 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 and Mrs M 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. I recognise that the Lender was and is part of the same group of companies as the Supplier. And I acknowledge that tie may not have been adequately disclosed at the Time of Sale. But I can’t currently see why that renders the credit relationship between Mr and Mrs M and the Lender unfair to them – such that I should uphold the complaint. I say that because FHFL has explained that the Supplier would share finance proposals among its approved external finance partners; the Supplier couldn’t write all its finance business “in-house” through FHFL; and FHFL largely provided loans to customers whose circumstances fell outside of its external finance partners’ lending terms. Indeed, in this case Mr and Mrs M say the Supplier had tried without success to find a loan with at least one other lender, before the FHFL agreed the loan in question. So, I’m not persuaded that Mr and Mrs M was led into a credit agreement with the Lender because it was tied in some way to the Supplier.

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What’s more, in stark contrast to the facts of Mr Johnson’s case, as I understand it, the Lender didn’t pay the Supplier any commission at the Time of Sale. And with that being the case, even if there were information failings at that time and regulatory failings as a result (which I make no formal finding on), 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 and Mrs M. Other points Here, the PR has asked us to determine the rights and obligations of the Lender based on the outcome of a court case in Spain. In my provisional decision, I said that in the absence of a judgment in an English jurisdiction on this issue, I was not persuaded it was fair and reasonable to conclude the loan agreement was able to be set aside. I remain of this view for the following reasons: • The Lender wasn’t a party to the proceedings the PR has referred to, so its’ rights under the Credit Agreement have not been determined. • I still think that the Purchase Agreement are governed by English law for the reasons already set out in my provisional decision. The PR has pointed to a different decision of the European Court of Justice that points the other way. But in the absence of any authorities under English law, I’m still not persuaded that (1) the Purchase Agreement, properly governed by English law, could be avoided following the Spanish Judgment to which the PR refers and (2) that the Credit Agreement were also something that could be successfully avoided. So again, I’m still not persuaded that it would be fair or reasonable to uphold the complaint for this reason. 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 M’s Section 75 claim, and I am not persuaded that the Lender was party to a credit relationship with them under the Credit Agreement that was 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, I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M and Mrs M to accept or reject my decision before 23 April 2026. Bill Catchpole Ombudsman

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