Shawbrook Bank Limited · DRN-5997680

The complaint Mr and Mrs N’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) 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. Background to the complaint Mr and Mrs N were members of a timeshare provider (the ‘Supplier’) – having purchased a timeshare from it in 2013. But the product at the centre of this complaint is their membership of a timeshare that I’ll call the ‘Fractional Club’ – which they bought on 30 December 2014 (the ‘Time of Sale’). They entered into an agreement with the Supplier to buy 15,000 fractional points at a cost of £12,300 (the ‘Purchase Agreement’), after trading in 10,000 points from their previous timeshare. Fractional Club membership was asset backed – which meant it gave Mr and Mrs N more than just holiday rights. It also included a share in the net sale proceeds of a property named on the Purchase Agreement (the ‘Allocated Property’) after their membership term ends. Mr and Mrs N paid for their Fractional Club membership by taking finance of £12,300 from the Lender (the ‘Credit Agreement’). Mr and Mrs N – using a professional representative (the ‘PR’) – wrote to the Lender on 19 April 2017 (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 N’s concerns as a complaint and issued its final response letter on 7 June 2017, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service in October 2017. It was assessed by an investigator who, having considered the information on file, rejected the complaint on its merits. Mr and Mrs N disagreed with the investigator’s assessment and asked for an ombudsman’s decision – which is why it was passed to me. I issued my provisional decision on 13 August 2025, in which I made the following provisional findings (which form part of this final decision). My provisional findings 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 do not currently think this complaint should be upheld.

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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. In support of this complaint, the PR referred me to the Finance and Leasing Association’s 2006 Lending Code. But it was the 2012 Lending Code which was in force at the Time of Sale, so I have had regard to that. Section 75 of the CCA: the Supplier’s alleged misrepresentations and breach of contract 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. 1. 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 N were told or led to believe by the Supplier that Fractional Club membership was the only way of releasing themselves from their existing membership when that was not true. 2. The Letter of Complaint also said that the Supplier had breached its contract with Mr and Mrs N because the Supplier had told them that their Fractional Club membership had a guaranteed end date when that was not true. But I think that complaint issue is better framed as an allegation of misrepresentation. I will deal with each allegation in turn. As there isn’t enough evidence on file to support the PR’s allegation that Fractional Club membership had been misrepresented for reasons relating to point 1, I’m not persuaded that there were representations by the Supplier on that issue that constituted a false statement of existing fact. And I’m reinforced in that view by the fact that if all Mr and Mrs N had wanted to achieve was to replace an indefinite membership with one that would end after a certain number of years, then they would not have needed to increase their number of points by 50 per cent. As top point 2, as I understand it, the sale of the Allocated Property could be postponed in certain circumstances according to the Fractional Club Rules. But Mr and Mrs N say little to nothing to persuade me that they were given a guarantee by the Supplier that the Allocated Property would be sold on a specific date when such a promise would have been impossible to stand by given the inevitable uncertainty of selling property some way into the future.

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So, while I recognise that Mr and Mrs N 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. For completeness, I don’t think this amounted to a breach of contract either. 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 an unfair credit relationship? 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 process 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 N; 2. Mr and Mrs N were pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale; 3. The Lender breached EU law; and 4. The term providing that the timeshare could be forfeited if Mr and Mrs N failed to pay their annual management fees was an unfair term under the Unfair Terms in Consumer Contracts Regulations 1999 (the ‘UTCCR’). However, having considered the entirety of the credit relationship between Mr and Mrs N and the Lender along with all of the circumstances of the complaint, I don’t think the credit relationship between them was likely to have been rendered unfair for the purposes of section 140A. When coming to that conclusion, and in carrying out my analysis, I have looked at: 1. The standard of the Supplier’s commercial conduct – which includes its sales and marketing practices at the Time of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Time of Sale, including the contractual documentation and disclaimers made by the Supplier; 3. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; 4. The inherent probabilities of the sale given its circumstances; and, when relevant, 5. Any existing unfairness from a related credit agreement. I have then considered the impact of these on the fairness of the credit relationship between Mr and Mrs N and the Lender. The Supplier’s sales and marketing practices at the Time of Sale Creditworthiness checks While the PR says that the right affordability checks weren’t carried out at the Time of Sale, I’ve seen evidence that Mr and Mrs N were asked and provided information about their gross income (which was jointly £50,000), their employment, and their mortgage status (they were homeowners with no mortgage). 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

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N 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 N. Indeed, they made an early part settlement in April 2015 when they paid £7,000 towards the loan balance, and the loan was settled in full in January 2016. Pressure The 2012 Lending Code says (on page 74): “We will … not pressurise you to enter into any agreement with us and try to make sure that credit brokers, and all other suppliers of goods and services we do business with, do not pressurise you”. I acknowledge that Mr and Mrs N may have felt weary after a sales process that went on for a long time. But they say little about what was said and/or done by the Supplier during their sales presentation that made them feel as if they had no choice but to purchase Fractional Club membership when they simply did not want to. They were also given a 14-day cooling off period and they have not provided a credible explanation for why they did not cancel their membership during that time. And with all of that being the case, there is insufficient evidence to demonstrate that Mr and Mrs N made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. Breach of EU law The PR did not explain in the Letter of Complaint which EU laws it says were breached. So I can’t fault the Lender for not having upheld that aspect of Mr S’s complaint. It didn’t have enough to go on. Forfeiture clause The PR says that the contractual terms setting out the Supplier’s ability to terminate Mr and Mrs S’s membership in the event of non-payment of management fees or other fees were unfair contract terms under the UTCCR, which prohibit “requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation”. In support of this argument, the PR relies on the case of Wilson. In that case, the judge held that it was disproportionate to have a contractual term saying that fractional membership can be ended by the Supplier for non-payment of fees – however small the amount outstanding may be – without refunding any of what he paid for his purchase, because then the Supplier would not only receive a windfall (the purchase price paid for the timeshare) but can also re-sell the same allocated property to another consumer. The judge described this as “wholly disproportionate and penal.” I agree with that, but before I can accept that this means that the relationship between the creditor and the debtor thereby became unfair, as the judge went on to find in Wilson, I think I have to take into account how the clause has actually operated in practice in relation to Mr and Mrs N’s agreements, not just how it could potentially operate hypothetically. The judge in Wilson said as much at paragraph [46] of his judgement: “The fact that clause D can be regarded in the abstract as an unfair

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term is not however the end of the enquiry for the purposes of s.140A of the Act. In considering the fairness of the relationship, it is necessary to consider all other relevant matters, and (amongst other things) these necessarily include how the clause has been operated in practice.” In Wilson the clause had been used to terminate the defendant’s timeshare. But Mr and Mrs N’s membership has not been terminated, and they have not stopped paying the management fees. Furthermore, they would still be legally obliged to pay those fees whether the foreclosure clause was there or not, and as that clause has not been invoked, I do not think that its mere existence, by itself, amounts to grounds to find that an unfair credit relationship exists.1 Conclusion Overall, therefore, I don’t think that Mr and Mrs N’s credit relationship with the Lender was rendered unfair to them under section 140A for any of the reasons above. The provision of information by the Supplier at the Time of Sale The PR says that Mr and Mrs N were not given sufficient information at the Time of Sale by the Supplier about the ongoing costs of Fractional Club membership. The PR also says that, because some of the terms of the Purchase Agreement weren’t individually negotiated, they were unfair, as were the terms governing the ongoing costs of membership and consequences of non-payment. 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 N sufficient information, in good time, on the various charges they could have been subject to as Fractional Club members in order to satisfy the requirements of regulation 12 of the 2010 Timeshare Regulations (which was concerned with the provision of ‘key information’). But even if that was the case, I cannot see that the ongoing costs of membership were applied unfairly in practice. And as neither Mr and Mrs N nor the PR have persuaded me that Mr and Mrs N would not have pressed ahead with their purchase had the finer details of the Fractional Club’s ongoing costs been disclosed by the Supplier in compliance with regulation 12, I cannot see why any failings in that regard are likely to be material to the outcome of this complaint given its fact and circumstances. As for the PR’s argument that there were one or more unfair contract terms in the Purchase Agreement, I can’t see that any such terms were operated unfairly against Mr and Mrs N in practice, nor that any such terms led them to behave in a certain way to their detriment. And with that being the case, I’m not persuaded that any of the terms governing Fractional Club membership are likely to have led to an 1 Even if I took a different view about that, the remedy would not be to unwind the Purchase Agreement and the Credit Agreement. Regulation 8 of the UTCCR says that an unfair term is not binding, but the rest of the contract shall continue to be binding if it is capable of continuing without the unfair term.

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unfairness that warrants a remedy even if they could be said to be unfair contract terms, which I make no formal finding on. My addendum provisional decision In my provisional decision I also indicated that I would provide my findings on the issue of undisclosed commission once I knew more about that. I did that by email on 2 March 2026, saying that the amount of the commission payment on Mr and Mrs N’s loan had been £123, which was only 1.00% of the amount borrowed and only 1.36% of the total charge for credit. Having regard to the Supreme Court’s recent judgement about commission,2 I thought this had not resulted in unfairness under section 140A, because it was so small that even if Mr and Mrs N had been told about it at the Time of Sale it would not have influenced their decision to enter into the Credit Agreement. For the same reason, I thought that any related breach of regulatory guidance had not had any impact on their decision. And based on the Supreme Court’s judgement, I concluded that the Supplier had not owed Mr and Mrs N a fiduciary duty when it brokered their loan. So, in summary, I wasn’t persuaded by any of the arguments put forward for why the credit relationship between Mr and Mrs N 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 N – all of which led me to provisionally conclude that there was no basis on which to uphold the complaint. Responses to my provisional decisions The Lender accepted my provisional decisions. The PR disagreed with my overall conclusion. When doing that, it provided significant submissions at first but (at our invitation) it went on to withdraw them and replace them with more concise submissions. These were primarily concerned with the suggestion that Mr and Mrs N Fractional Club membership had been marketed and sold as an investment in contravention of a prohibition on selling timeshares in that way.3 They asked why I had not addressed this issue in my provisional decision; the answer is because they had not raised it before. It is not mentioned in the Letter of Complaint, nor is it mentioned in the covering letter which accompanied the referral of this complaint to our service. But as it is not a free-standing complaint issue, but rather a new argument to the effect that there was an unfair credit relationship under section 140A, I am not precluded from considering it now just because it was not raised with the Lender in the Letter of Complaint. The PR also included allegations of fraudulent misrepresentation on the basis that they were told by the Supplier at the Time of Sale that: (1) they were buying part ownership of a physical property; (2) Fractional Club membership was an 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. Those matters were also submitted to be breaches of contract. 2 Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd [2025] UKSC 33 (‘Johnson’). 3 Regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010.

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The PR also repeated its concerns about the pressure Mr and Mrs N were put under by the Supplier at the Time of Sale, the Lender’s decision to lend being irresponsible, and payment of commission to the Supplier by the Lender – albeit with a focus on the Supreme Court’s judgment in Johnson. And the PR argued that the Purchase Agreement and the Credit Agreement were financially onerous. Finally, the PR provided questionaires which Mr and Mrs N had filled in in 2017, as evidence in support of their claim that the Fractional Club had been sold to them as an investment. In one of the questionnaires, they also alleged that on Mr and Mrs N’s bank statements the loan had been mis-labelled as being for “home improvements”. 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 has been shared in several hundred published decisions on very similar complaints, as well as in previous correspondence with the parties. So, there’s no need for me to set this out again in detail here. I simply remind the parties that our rules4 say that in considering what is fair and reasonable in all the circumstances of the complaint, I will take into account, where relevant: (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (when appropriate), what I consider to have been good industry practice at the relevant time. 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 afresh, I’m not persuaded to depart from my provisional decision for reasons I’ll now explain. Before I do, I want to make it clear that I recognise that this complaint, when originally made, was wide ranging and made on a number of different grounds, including: (1) Misrepresentations by the Supplier at the Time of Sale, giving Mr and Mrs N a claim against the Lender under section 75 of the CCA, which the Lender failed to accept and pay. (2) A breach of contract by the Supplier, giving Mr and Mrs N a claim against the Lender under section 75 of the CCA, which the Lender failed to accept and pay. (3) The Lender being party to an unfair credit relationship under the Credit Agreement and related Purchase Agreement for the purposes of section 140A of the CCA. As I said in my provisional decision, my role as an ombudsman is to decide what’s fair and reasonable in the circumstances of this complaint – rather than address every single point that’s been made. And with that being the case, while I have read all of the PR’s submissions in full, 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 4 Specifically rule 3.6.4 in the Dispute Resolution Rules, found in the Financial Conduct Authority’s Handbook for Rules and Guidance.

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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 received from both sides. So, while the PR argues in response to my provisional decision that, under section 140B(9) of the CCA, it is for the Lender to prove that its credit relationship with Mr and Mrs N 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 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.” 5) Section 75 of the CCA: the Supplier’s misrepresentations and breach of contract at the Time of Sale It was argued by the PR, when this complaint was first made, that the Supplier misrepresented Fractional Club membership at the Time of the Sale. The reasons for this aspect of this complaint at that time were addressed in my provisional decision. And I see no reason to change or add to those. But 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, as well as amounting to breaches of contract: (1) Mr and Mrs N were buying part ownership of a physical property; (2) Fractional Club membership was an investment; (3) the Allocated Property would be sold on a specific date; 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 the evidence suggests that: (1) any rights in the Allocated Property are personal rights rather than the rights of ownership, (2) 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 N 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 5 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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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. 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 their allocated property is sold. After all, Mr and Mrs N’s share in the Allocated Property 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 none of the contractual paperwork made any promises that a profit might be made. The PR argues that Mr and Mrs N’s Fractional Rights Certificate, for instance, made a clear and unambiguous “investment promise” because it indicated that, upon the sale of the Allocated Property, they would receive 3/52 of the net sales proceeds. However, nowhere did the Certificate imply let alone say that that share would be worth more in real terms in the future than at the Time of Sale. 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 N as an investment orally. Mr and Mrs N 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 Property in the future. And while the PR’s own calculations might cast some doubt over the likelihood of the Allocated Property being sold at a profit given the initial and ongoing costs of it to Mr and Mrs N, there isn’t enough evidence to persuade me that the relevant sales representative(s) would have carried out that sort of calculation at the Time 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 allocated properties, that does not change the fact that the shares of members (such as Mr and Mrs N) were clearly the purchase of a share of the net sale proceeds of a specific and identified property in a specific resort. Nor do I think that it was a misrepresentation to say that the Allocated Property would be sold; nor do I think that it was guaranteed that it would be sold on a specific date, as opposed to being put on the market on that date. Indeed, it simply isn’t feasible to suppose that a property can definitely be sold on the same day as it is put on the market, so I don’t think that such a literal meaning can be

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attributed to the term “Proposed Sale Date of Property” in the Purchase Agreement (or any equivalent expression used in the sales presentation), or that any consumer’s understanding of that term at the time of sale would really have been so literal. It’s clearly just the date on which the sales process begins, not when it begins and concludes. (And while the club rules do contain a provision for postponing the sale, that requires the unanimous consent of all of the fractional owners, including Mr and Mrs N.) I’m not persuaded, therefore, by the allegations of fraudulent or negligent misrepresentation from the PR. For essentially the same reasons, I do not think these allegations establish a breach of contract either. And with that being the case, they aren’t reasons to uphold this complaint and direct the Lender to compensate Mr and Mrs N. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? I’ve already explained why, in light of the PR’s latest allegations of fraudulent misrepresentation, I’m not persuaded that Fractional Club membership was actionably misrepresented by the Supplier at the Time of Sale. And it is for those reasons that I don’t think the credit relationship between Mr and Mrs N and the Lender was rendered unfair to them on the basis that membership had been misrepresented. However, there are, of course, other reasons why the PR argues that the credit relationship in question was unfair. But having reconsidered the entirety of that relationship along with everything that has now been said and/or provided by both sides, I still don’t think the credit relationship between Mr and Mrs N and the Lender was likely to have been rendered unfair to them for the purposes of section 140A. When coming to that conclusion, I have looked again 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. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; 4. The inherent probabilities of the sale given its circumstances; and, when relevant 5. Any existing unfairness from a related credit agreement. I have also reconsidered any commercial (including commission) arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements. The PR continues to argue that: 1. The Lender’s decision to lend to Mr and Mrs N was, in essence, irresponsible; and 2. Mr and Mrs N were pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale. However, as neither the PR nor Mr and Mrs N have submitted any new evidence to further either of the arguments above, it is for the same reasons I gave in my provisional decision that I don’t think either of them render their credit relationship with the Lender unfair to them for the purposes of section 140A.

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But I’ll turn now to the PR’s further reasons for asserting that the credit relationship in question was unfair. Those are: 1. Falsely describing the loan on Mr and Mrs N’s bank statement as a loan to finance home improvements; 2. Breaching regulations by mis-selling the Fractional Club as an investment; and 3. The overall cost incurred by Mr and Mrs N as a result of paying not only their loan payments but also the annual maintenance fees. Falsely describing the loan as being for home improvements This matter overlaps with the allegation of irresponsible lending, because the PR argues that the Supplier deliberately concealed the true purpose of the loan by disguising it as a loan for home improvements “to avoid the strict underwriting scrutiny that would normally be applied to a £12300 timeshare advance.” This is said to have created unfairness under section 140A of the CCA, because otherwise the loan might not have been granted. The evidence provided in support of this allegation, and which is said to have alerted Mr and Mrs N to the Supplier’s deception, is an entry on their joint current account statement (with a third party bank) showing a debit card payment of £4,160:61 on 22 January 2016, which is the payment which settled their loan balance. That entry includes the description “HOME IMPROVEMENT LOAN", which appears to be data which came from the Supplier. However, I can’t accept that this could have influenced the Lender’s underwriting decision, because this was 13 months after the Time of Sale, and the Credit Agreement describes the goods and services being financed as “Fractional Points.” So I’m satisfied not only that the Lender knew the true purpose of the loan at the Time of Sale, but also that there was no attempt to deceive the Lender at the Time of Sale. The Supplier’s alleged breach of regulation 14(3) of the Timeshare Regulations There is competing evidence in this complaint as to whether the 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.6 I acknowledge that it is possible that Fractional Club membership was marketed and sold to Mr and Mrs N as an investment in breach of regulation 14(3). But I also think that it isn’t necessary to make a formal finding on that particular issue for the purposes of my determination on this complaint, because a breach of regulation 14(3) by the Supplier is not itself determinative of the outcome in this complaint unless the impact of such a breach suggests otherwise. The PR disagrees with that and cites the judgment of Mrs Justice Collins Rice in Shawbrook & BPF v FOS in support – 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 6 The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010.

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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 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 a credit relationship between Mr and Mrs N and the Lender that was unfair to them and warranted relief as a result, then an important consideration is whether the Supplier’s breach of regulation 14(3) led them to enter into the Purchase Agreement and the Credit Agreement. 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. If there had been a breach of regulation 14(3), would it have rendered the credit relationship between Mr and Mrs N and the Lender unfair to them? Having found that it was possible that the Supplier breached regulation 14(3) of the Timeshare Regulations at the Time of Sale, I have considered what impact that breach (if there was one) would have had on the fairness of the credit relationship between Mr and Mrs N and the Lender under the Credit Agreement and related Purchase Agreement.

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But on my reading of the evidence before me, I’m not persuaded that the prospect of a financial gain from Fractional Club membership was an important and motivating factor when Mr and Mrs N decided to go ahead with their purchase, such that they would have made an entirely different purchasing decision had there not been a breach of regulation 14(3). I will explain why. In support of this allegation, the PR has (since my provisional decision) provided two questionnaires which purport to have been filled in by Mr and Mrs N in August 2017. The PR has offered an explanation for why these were not provided to our service when this complaint was referred to our service in October 2017, but as that explanation hinges on a letter that was written in April 2018, after the complaint was first made and after the consumer is said to have written the statement in question, I don’t think that is very persuasive. (Nor did it prevent the PR from providing other evidence between 2018 and 2025.) The provenance of these questionnaires is therefore not entirely clear, but even if I accept that their late disclosure was just an oversight and that they were indeed completed in 2017 (and I make no formal finding about that), the fact that the sale of the fractional points as an investment was not mentioned in the Letter of Complaint, or in the referral of this complaint to our service (or in any subsequent correspondence with our service about this complaint prior to my provisional decision) does not suggest that it had really been an issue of much importance to Mr and Mrs N. I have still considered the questionnaires anyway. Only one of them is relevant to this issue, the one about their section 75 claim, but that does not prevent me from considering the matter under section 140A. In that questionnaire, the answers to six questions (3, 20, 21, 24, 26 and 39) are relevant. Four of these refer only to getting money back, and they do not indicate an expectation of making a profit. For example, question 3 asks about why Mr and Mrs N bought fractional points; their answer is: “We were told the new product was for 15 years, then we could exit our timeshare & receive our money back.” The other two are the answers to questions 20 and 21. Question 20 asks “Were you ever guaranteed a profit at the end of your investment?” and is followed by boxes to tick for yes or no; the yes box has been ticked. That goes further than the other answers, but it is a leading question and so I think it carries rather less weight than the answers given in Mr and Mrs N’s own words (although I do not think it would be fair to discount it entirely). Then question 21 says “If the answer to 20 is ‘yes’, how much profit were you guaranteed to make?”, to which the response was “At least the value of our investment”, which at least has the advantage of being in Mr and Mrs N’s own words. But neither of these questions deal with the effect which what they were told had on their decision to purchase. The most relevant questions about that subject are questions 3 and 24, which have similar answers, both of which refer only to money back (and exiting their existing timeshare). On balance, therefore, for the reasons I’ve set out above, I don’t think the credit relationship between Mr and Mrs N and the Lender was unfair to them, even if the Supplier had breached regulation 14(3). The overall costs of the Fractional Club The PR has calculated that the total amount spent (or to be spent) by Mr and Mrs N under the Credit Agreement and the Purchase Agreement, including the annual maintenance charges, adds up to almost £45,600. This is said to be unfair because of (1) the alleged lack of proper affordability checks, and (2) the disparity between the value received and the financial burden imposed, leading to what it called a severe imbalance in the parties' rights and obligations. I have already explained why I do not think there was a failure to carry out affordability checks. But to that I would add that the question of whether borrowers can afford a loan

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does not depend on the total financial liability incurred, considered as a lump sum, but rather on their ability to repay the loan in a sustainable manner.7 The loan payments were £177:90 per month, which does not strike me as unaffordable for homeowners with no mortgage and an income of £50,000. As for whether the fractional points were good value for money, I don’t think I need to make a finding about that. The Credit Agreement made it clear how much interest Mr and Mrs N would pay and how much they would have to repay in total, and they were told there would be annual maintenance fees. They weren’t hoodwinked into thinking they would only have to pay a total of £12,300. It was their informed choice to purchase the fractional points, and they had 14 days (the cooling-off period) to reflect on their decision and to withdraw from their purchase and from their loan if they wished to change their minds. They decided that the points were worth buying, and if they have since changed their minds about that, that does not mean that their relationship with the Lender was unfair all along. The provision of information by the Supplier at the Time of Sale As I’ve already said, I set out my thoughts in relation to the implications of the Supreme Court’s judgment in Hopcraft, Johnson and Wrench for this complaint in my addendum provisional decision. I remain satisfied that the Lender has provided me with sufficient information to reach a conclusion about its commercial (including commission) arrangements with the Supplier. I’ve seen nothing in this case that leads me to think that the information in question is inaccurate. And while I recognise that the PR might disagree with the thoughts I shared in my addendum provisional decision, it hasn’t offered any evidence and/or arguments that lead me to think that (1) the factors referenced by the Supreme Court have a bearing on the outcome of this complaint given its circumstances, or (2) there are any other reasons why the commercial (including commission) arrangements between the Supplier and the Lender rendered the credit relationship between the latter and Mr and Mrs N under the Credit Agreement and related Purchase Agreement unfair for the purposes of section 140A. Conclusion Having adopted my provisional findings, and reconsidered the facts and circumstances of this complaint, I still don’t think the Lender acted unfairly or unreasonably when it dealt with Mr and Mrs N’s section 75 claim. I’m still not persuaded that the Lender was party to a credit relationship with Mr and Mrs N 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 for me to direct the Lender to compensate Mr and Mrs N. My final decision My decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr and Mrs N to accept or reject my decision before 28 April 2026. Richard Wood Ombudsman 7 FLA 2012 Lending Code, page 74.

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