Shawbrook Bank Limited · DRN-6265756

The complaint Mr and Mrs H’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 claims under Section 75 of the CCA. Background to the Complaint Mr and Mrs H were existing members of a timeshare provider (the ‘Supplier’) – having purchased a number of products from it since 2004. But the products at the centre of this complaint are their memberships of a timeshare that I’ll call the ‘Fractional Club’. Mr and Mrs H purchased memberships of the Fractional Club from the Supplier on the dates below: • 21,000 fractional points on 23 May 2013 at a cost of £12,852 (the ‘Time of Sale 1’) • 6,000 fractional points on 26 January 2015 at a cost of £7,500 (the ‘Time of Sale 2’) (which, when appropriate, I’ll simply refer to as the ‘Purchase Agreements’) Where appropriate, the above dates are the ‘Times of Sale’ for the purposes of my decision. Fractional Club membership was asset backed – which meant it gave Mr and Mrs H 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, when appropriate, as the ‘Allocated Properties’) after their membership terms end. Mr and Mrs H paid for their Fractional Club memberships by taking the following amounts of finance of from the Lender: • £12,852 on 23 May 2013 (‘Credit Agreement 1’) • £7,500 on 26 January 2015 (‘Credit Agreement 2’) (which, when appropriate, I’ll simply refer to as the ‘Credit Agreements’) Mr and Mrs H also purchased more fractional points in 2014, but as they used a credit card to fund that purchase, and not finance from the Lender, that purchase falls outside the scope of this complaint. Mr and Mrs H – using a professional representative (the ‘PR’) – wrote to the Lender on 31 January 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 H’s concerns as a complaint and issued its final response letter on 24 March 2017, rejecting it on every ground.

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The complaint was then referred to the Financial Ombudsman Service. It was assessed by an Investigator who, having considered the information on file, rejected the complaint on its merits. Mr and Mrs H 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 14 August 2025. And, in summary, I made the following provisional findings (which form part of this final decision): “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. 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. Section 75 of the CCA: the Supplier’s misrepresentations at the Times of Sale The CCA introduced a regime of connected lender liability under section 75 that affords consumers (“debtors”) a right of recourse against lenders that provide the finance for the acquisition of goods or services from third-party merchants (“suppliers”) in the event that there is an actionable misrepresentation and/or breach of contract by the supplier. Certain conditions must be met if the protection afforded to consumers is engaged, including, for instance, the cash price of the purchase and the nature of the arrangements between the parties involved in the transaction. The Lender doesn’t dispute that the relevant conditions are met. But for reasons I’ll come on to below, it isn’t necessary to make any formal findings on them here. It was said in the Letter of Complaint that Fractional Club membership had been misrepresented by the Supplier at the Times of Sale because Mr and Mrs H were told or led to believe by the Supplier that Fractional Club membership: 1) had a guaranteed end date when that was not true. 2) was the only way of releasing themselves from their existing membership when that was not true. As I understand it, the sale of the Allocated Properties could be postponed in certain circumstances according to the Fractional Club Rules. But Mr and Mrs H say little to nothing to persuade me that they were given a guarantee by the Supplier that the Allocated Properties would be sold on specific dates when such promises would have been impossible to stand by given the inevitable uncertainty of selling property some way into the future. And as there isn’t enough evidence on file to support the PR’s allegation that Fractional Club memberships had been misrepresented for reasons relating to point (2), I’m not persuaded that there were representations by the Supplier on the issue in question that constituted false statements of existing fact. So, while I recognise that Mr and Mrs H 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

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that there was. And that means that I don’t think that the Lender acted unreasonably or unfairly when it dealt with this particular Section 75 claim. Section 75 of the CCA: the Supplier’s Breach of Contract The PR says on Mr and Mrs H’s behalf that the Supplier breached one of the Purchase Agreements because it promised them the “net proceeds from the sale of the Property” but it says this can’t happen as they do not own any part of the properties. But it’s unclear to me why the PR thinks the Supplier has breached either of the two Purchase Agreements in question when the sales of the Allocated Properties are not due to take place until sometime after 31 December 2027 and 31 December 2029. And I’ve seen nothing to suggest to me that Mr and Mrs H have not received something they were promised by the Supplier under the two Purchase Agreements. So, from the evidence I have seen, I do not think the Lender is liable to pay Mr and Mrs H any compensation for a breach of contract by the Supplier. And with that being the case, I do not think the Lender acted unfairly or unreasonably in relation to this aspect of the complaint either. 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 Times 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 H; and 2) Mr and Mrs H were pressured by the Supplier into purchasing Fractional Club membership at the Times of Sale. However, having considered the entirety of the credit relationship between Mr and Mrs H 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 Times of Sale along with any relevant training material; 2) The provision of information by the Supplier at the Times of Sale, including the contractual documentation and disclaimers made by the Supplier; 3) Evidence provided by both parties on what was likely to have been said and/or done at the Times of Sale; 4) The inherent probabilities of the sale given its circumstances; and, when relevant 5) Any existing unfairness from any related credit agreement. I have then considered the impact of these on the fairness of the credit relationships between Mr and Mrs H and the Lender. The Supplier’s sales & marketing practices at the Times of Sale While the PR says that the right affordability checks weren’t carried out at the Times of Sale, even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied that the money lent to

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Mr and Mrs H 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 them. I acknowledge that Mr and Mrs H 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 either of the 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 memberships during those times. And with all of that being the case, there is insufficient evidence to demonstrate that Mr and Mrs H made the decision to purchase their Fractional Club memberships 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 H’s credit relationships with the Lender were rendered unfair to them under Section 140A for any of the reasons above. But the PR has since given a further reason why it now says the credit relationships with the Lender were unfair to them. And that’s the suggestion that Fractional Club memberships were 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 H’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.” This allegation does not appear in the PR’s Letter of Complaint or referral to our service. But the PR now says that the Supplier did exactly that at the Times of Sale. The term “investment” is not defined in the Timeshare Regulations. But for the purposes of this provisional decision, and by reference to the decided authorities, an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit. The shares in the Allocated Properties clearly constituted an investment as they offered Mr and Mrs H the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But it is important to note at this stage that the fact that Fractional Club membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se. In other words, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold.

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To conclude, therefore, that Fractional Club memberships were marketed or sold to Mr and Mrs H 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 their Fractional Club memberships 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 memberships were marketed and/or sold by the Supplier at the Times of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations. On the one hand, it is clear that the Supplier made efforts to avoid specifically describing membership of the Fractional Clubs as an ‘investment’ or quantifying to prospective purchasers, such as Mr and Mrs H, 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 the Fractional Club memberships as investments. So, I accept that it’s equally possible that the Fractional Club memberships were marketed and sold to Mr and Mrs H as investments in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Was the credit relationship between the Lender and the Consumer rendered unfair? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Times of Sale, I now need to consider what impact those breaches had on the fairness of the credit relationships between Mr and Mrs H 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 H 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 H decided to go ahead with their purchases. 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 H themselves don’t persuade me that their purchase was motivated by their share in the Allocated Properties and the possibility of a profit, I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision they ultimately made. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club memberships as investments in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr and Mrs H’s decisions to purchase Fractional Club memberships

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at the Times of Sale were motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests they would have pressed ahead with their purchases whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationships between Mr and Mrs H and the Lender were unfair to them even if the Supplier had breached Regulation 14(3).” I also indicated that I would provide my findings on the issue of commission once I knew more about that given the circumstances of Mr and Mrs H’s complaint. I did that by email on 12 January 2026, saying: “The legal and regulatory context The parties are doubtless familiar with the DISP 3.6.4R provisions and the legal and regulatory context relevant to this complaint, which has been shared in several hundred decisions our service has published on very similar complaints. But noting the aspects relating to payment of commission, the following regulatory rules/guidance1 are also relevant: • The Consumer Credit Sourcebook (“CONC”)2 content at the material time, notably CONC 3.7.3R, CONC 4.5.3R, and CONC 4.5.2G. • Principles 6,7, and 8 of the FCA’s Principles for Businesses (“PRIN”)3. CONC provisions sit alongside firms’ wider obligations such as those in PRIN. The Provision of Information by the Supplier at the Times of Sale The PR says that a payment of commission from the Lender to the Supplier at the Times of Sale should lead me to uphold this complaint because, simply put, information in relation to that payment went undisclosed at the Times 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 Johnson’s case it was 55%. This was “so high” and “a powerful indication that the relationship…was unfair” (see paragraph 327); 1 “R” denotes a rule; “G” denotes guidance 2 The relevant rules, guidance and principles can be found in the Financial Conduct Authority (“FCA”) Handbook, available on its website. 3 Ibid.

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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 H in arguing that their credit relationships with the Lender were unfair to them for reasons relating to commission given the facts and circumstances of this complaint. I haven’t seen anything to suggest that the Lender and Supplier were tied to one another contractually or commercially in a way that wasn’t properly disclosed to Mr and Mrs H, nor have I seen anything that persuades me that the commission arrangements between them gave the Supplier a choice over the interest rates that led Mr and Mrs H into credit agreements that cost disproportionately more than they otherwise could have. I acknowledge that it’s possible that the Lender and the Supplier failed to follow the regulatory guidance in place at the Times of Sale insofar as it was relevant to disclosing the commission arrangements between them. But as I’ve said before, the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. And with that being the case, it isn’t necessary to make a formal finding on that because, even if the Lender and the Supplier failed to follow the relevant regulatory guidance at the Times 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 relationships in question unfair to Mr and Mrs H. In stark contrast to the facts of Mr Johnson’s case, the amounts of commission paid by the Lender to the Supplier for arranging the Credit Agreements that Mr and Mrs H entered into weren’t high. Regarding the May 2013 purchase, at £1,028.16, it was only 8% of the amount borrowed and 8.7% as a proportion of the charge for credit. And regarding the January 2015 sale, it was £75.00, which was 1% of the amount borrowed and 1.3% as a proportion of the charge for credit. So, if they had known at the Times of Sale that the Supplier was going to be paid a flat rate of commission at those levels, I’m not currently persuaded that they either wouldn’t have understood that or would have otherwise questioned the size of the payments at those times. After all, Mr and Mrs H wanted the Fractional Club memberships and had no obvious means of their own to pay for them. And at such a low level, the impact of

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commission on the cost of the credit they needed for each timeshare that they wanted doesn’t strike me as disproportionate. So, I think that they would still have taken out the loans to fund their purchases at the Times of Sale had the amount of commission been disclosed. What’s more, based on what I’ve seen 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 Agreements. And as it wasn’t acting as an agent of Mr and Mrs H but as the supplier of contractual rights they obtained under the Purchase Agreements, the transactions don’t strike me as ones with features that suggest the Supplier had an obligation of ‘loyalty’ to them when arranging the Credit Agreements and thus a fiduciary duty. 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 relationships unfair to Mr and Mrs H. So, given all of the factors I’ve looked at both here and in my provisional decision, and having taken all of them into account, I’m still not persuaded that the credit relationships between Mr and Mrs H and the Lender under the Credit Agreements and related Purchase Agreements were unfair to them. And as things currently stand, I don’t think it would be fair or reasonable that I uphold this complaint on that basis. Commission: The Alternative Grounds of Complaint While I’ve provisionally found that Mr and Mrs H’s credit relationships with the Lender weren’t unfair to them for reasons relating to the commission arrangements between it and the Supplier, two of the grounds on which I came to that conclusion also constitute separate and freestanding complaints to Mr and Mrs H’s complaint about an unfair credit relationship. So, for completeness, I have considered those grounds on that basis here. The first ground relates to whether the Lender is liable for the dishonest assistance of a breach of fiduciary duty by the Supplier because it took payments of commission from the Lender without telling Mr and Mrs H (i.e., secretly). And the second relates to the Lender’s compliance with the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them. However, for the reasons I set out above, I’m not persuaded that the Supplier – when acting as credit broker – owed Mr and Mrs H a fiduciary duty. So, the remedies that might be available at law in relation to the payment of secret commission aren’t, in my view, available to them. And while it’s possible that the Lender failed to follow the regulatory guidance in place at the Times of Sale insofar as it was relevant to disclosing the commission arrangements between it and the Supplier, I don’t think any such failure on the Lender’s part is itself a reason to uphold this complaint because, for the reasons I also set out above, I think they would still have taken out the loans to fund their purchases at the Times of Sale had there been more adequate disclosure of the commission arrangements that applied at those times. So again, in conclusion, given the facts and circumstances of this complaint, I still do not think that the Lender acted unfairly or unreasonably when it dealt with Mr and Mrs H’s Section 75 claims. I am also not persuaded that the Lender was party to credit relationships with them under the Credit Agreements and related Purchase Agreements that were unfair to them for the purposes of Section 140A of the CCA. And having taken everything into

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account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate them.” So, in summary, I wasn’t persuaded by any of the arguments put forward for why the credit relationship between Mr and Mrs H 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 H – all of which led me to provisionally conclude that there was no basis on which to uphold the complaint. The Lender accepted my provisional decision. The PR disagreed with my overall conclusion. When doing that, it provided significant submissions at first but it went on to withdraw them and replace them with more concise submissions – which, while primarily concerned with the suggestion that Mr and Mrs H Fractional Club membership had been marketed and sold as an investment in contravention of a prohibition on selling timeshares in that way, included allegations of fraudulent misrepresentation on the basis that they were told by the Supplier at the Times of Sale that: 1. They were buying part ownership of physical properties; 2. Fractional Club membership was an investment; 3. The Allocated Properties would be sold; and 4. They would receive a share of the net sales proceeds of sale when the Allocated Properties are sold. The PR also repeated its concerns about the payment of commission to the Supplier by the Lender – albeit with a focus on the Supreme Court’s judgment in Hopcraft v Close Brothers Limited; Johnson v FirstRand Bank Limited; Wrench v FirstRand Bank Limited [2025] UKSC 33 (‘Johnson’). As a result, the complaint was passed back to me for further thought and my Final Decision. The Legal and Regulatory Context The legal and regulatory context that I think is relevant to this complaint 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: 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. 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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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 Times of Sale giving Mr and Mrs H 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 H 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 unfair credit relationships under the Credit Agreements and related Purchase Agreements for the purposes of Section 140A of the CCA. However, as the PR’s more concise response to my provisional decision relates, in the main, to (3), if I haven’t been provided with new arguments and/or evidence to consider in relation to (1) or (2), I see no reason to change or add to my conclusions (as set out in the summary of my provisional decision above) in relation to them. Indeed, 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 jurisdiction under which I’m deciding this complaint is inquisitorial rather than adversarial – which means that my findings are made, on the balance of probabilities, in light of the evidence and/or arguments from both sides. So, while the PR argues in response to my provisional decision that, under Section 140B(9) of the CCA, it is for the Lender to prove that its credit relationships with Mr and Mrs H were not unfair simply because they allege that they were, 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 relationships are not 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 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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Section 75 of the CCA: the Supplier’s misrepresentations at the Times of Sale It was argued by the PR, when this complaint was first made, that the Supplier misrepresented Fractional Club membership at the Times of 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 in response to my provisional decision, the PR argues that the Fractional Clubs membership were collectively not worth enough to make Mr and Mrs H a profit and, as such, the following representations by the Supplier were fraudulent: 1. They were buying part ownership of a physical property; 2. Fractional Club membership was an investment; 3. The Allocated Properties would be sold; and 4. They would receive a share of the net sales proceeds of sale when the Allocated Properties were sold. The PR takes that view because it says the evidence suggests that the Lender hasn’t provided any evidence that the Allocated Properties will sell in the future (making it unlikely that Mr and Mrs H will receive anything from their shares in them) and, by the PR’s own calculations, given the initial and ongoing costs of Fractional Club memberships, it was never possible to make a profit from the sale of the Allocated Properties. The law relating to misrepresentation is a combination of the common law, equity and statute – though, as I understand it, the Misrepresentation Act 1967 didn’t alter the rules as to what constitutes an effective misrepresentation. Summarising the relevant pages in Chitty on Contracts, a material and actionable misrepresentation is an untrue statement of existing fact or law made by one party (or his agent for the purposes of passing on the representation, acting within the scope of his authority) to another party that induced that party to enter into a contract. However, a mere statement of opinion, rather than fact or law, which proves to be unfounded, isn’t a misrepresentation unless the opinion amounts to a statement of fact and it can be proved that the person who gave it did not hold it or could not reasonably have held it. It also needs to be shown that the other party understood and relied on the implied factual misrepresentation. Telling prospective members that they were investing their money because they were buying a fraction or share of one of the Supplier’s properties was not untrue – nor was it untrue to tell prospective members that they would receive some money when the allocated property is sold. After all, Mr and Mrs H’s shares in the Allocated Properties clearly constituted an investment as it offered them the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But as the PR knows, while the term “investment” is not defined in the Timeshare Regulations, it was agreed by the parties in Shawbrook & BPF v FOS that, by reference to the decided authorities, “an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit” (see paragraph 56). Yet, contrary to what the PR says, none of the contractual paperwork made any promises that a profit might be made.

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As I said in my provisional decision, the Supplier’s 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 H as an investment orally. Mr and Mrs H say little about what was said, by whom and in what circumstances for the purposes of determining whether representations by the Supplier amounted to false statements of existing fact rather than expressions of honestly held opinions about the likely value of the Allocated Properties in the future. And while the PR’s own calculations might cast some doubt over the likelihood of the Allocated Properties being sold at a profit given the initial and ongoing costs of it to Mr and Mrs H, there isn’t enough evidence to persuade me that the relevant sales representative(s) would have carried out that sort of calculation at the Times of Sale or would otherwise have had information that would indicate that they knew or ought reasonably to have known at the time that any such representations weren’t true. And while the PR might question the exact legal mechanism used to give prospective members an interest in allocated properties, that does not change the fact that the shares of members (like Mr and Mrs H) were clearly the purchase of a share of the net sale proceeds of a specific property in a specific resort. I’m not persuaded, therefore, by the allegations of fraudulent misrepresentation from the PR. And with that being the case, they too aren’t reasons to uphold this complaint and direct the Lender to compensate Mr and Mrs H. 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 memberships were actionably misrepresented by the Supplier at the Times of Sale. And it is for those reasons that I don’t think the credit relationships between Mr and Mrs H and the Lender were rendered unfair to them on the basis that their memberships had been misrepresented to them. However, there are, of course, other reasons why the PR argues that the credit relationships in question were unfair. But having reconsidered the entirety of the relationships along with everything that has now been said and/or provided by both sides, I still don’t think the credit relationships between Mr and Mrs H and the Lender were 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 Times of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Times of Sale, including the contractual documentation and disclaimers made by the Supplier; 3. Evidence provided by both parties on what was likely to have been said and/or done at the Times of Sale; 4. The inherent probabilities of the sales given the 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 Times of Sale and the disclosure of those arrangements. I’ll turn now to what continues to be the main reason for the PR’s assertion that the credit relationships in question were unfair. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations

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As I said in my provisional decision, there is competing evidence in this complaint as to whether the Fractional Club memberships were marketed and/or sold by the Supplier at the Times of Sale as an investment in breach of Regulation 14(3) of the Timeshare Regulations. I acknowledged that it was possible that the Fractional Club memberships were marketed and sold to Mr and Mrs H as an investment in breach of Regulation 14(3). This is a view that I still hold. But I also thought and still 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 suggested otherwise. So, the PR is incorrect when it says that I found that the memberships were sold as investments in breach of the Timeshare Regulations. 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 Regulation 14(3) of the Timeshare Regulations was "causative of the legal relations entered into". She recognised that such a breach was "conduct that knocks away the central consumer protection safeguard", but she went on to say that it was the ombudsmen behind the two reviewed decisions who found that such a breach was, given the facts and circumstances of the relevant complaints, causative of the consumers in question purchasing their timeshares and taking out loans to do so. What’s more, the Supreme Court’s judgment in Plevin makes it clear that regulatory 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. […]

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[…] There is a link between (i) the failings of the creditor which lead to the unfairness in the relationship, (ii) the unfairness itself, and (iii) the relief. It is not to be analysed in the sort of linear terms which arise when considering causation proper. The court is to have regard to all the relevant circumstances when determining whether the relationship is unfair, and the same sort of approach applies when considering what relief is required to remedy that unfairness. […]” So, it still seems to me that, if I am to conclude that a breach of Regulation 14(3) led to credit relationships between Mr and Mrs H 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. 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 any 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 relationships between Mr and Mrs H 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 Times of Sale, I have considered (as I did in my provisional decision) what impact that breach (if there was one) had on the fairness of the credit relationship between Mr and Mrs H and the Lender under the Credit Agreements and related Purchase Agreements. And on my re-reading of the evidence before me, I’m still not persuaded that the prospect of a financial gain from the Fractional Club memberships was an important and motivating factor when Mr and Mrs H decided to go ahead with their purchases, such that they would have made entirely different purchasing decisions had there not been a breach of Regulation 14(3). I will explain why. Regarding the PR’s Letter of Complaint, dated 31 January 2017, the PR says it relies entirely on the original allegations set out in that letter and the contemporaneous documentary evidence it says was gathered at the time. Specifically, it says: "Within that original correspondence, we established 4 distinct material misstatements which form the foundation of this dispute. Specifically, the supplier represented that our clients would own a share of a property, that the purchase was an investment, that the property would definitely be sold, and that our clients would receive a share of the proceeds of that sale." And: "The core of our clients' complaint rests on the fact that [the Supplier] sold them a fractional ownership product as a financial investment." But the PR’s Letter of Complaint, dated 31 January 2017, does not make any allegation that the Fractional Club memberships were sold by the Supplier to Mr and Mrs H as investments at all. So I don’t think that the PR’s new submissions are anchored to the original complaint as it says. In response to the PD, the PR has also provided me with copies of questionnaires signed and dated by Mr and Mrs H on 14 August 2017. The PR says that these documents “were prepared contemporaneously with the initial stages of the complaint”. I note that the

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documents are signed and dated more than six months after the PR’s Letter of Complaint, and also several months after the Lender’s final response. With this noted, I have considered these documents, which cover the Time of Sale 1 and Time of Sale 2 separately. Within the questionnaire covering the Time of Sale 2 only, I can see that Mr and Mrs H have ticked “Yes” to a question that reads: “Were you ever guaranteed a profit at the end of your membership?” But this question is leading in its very nature, and it does not provide sufficient context for me to believe that Mr and Mrs H went ahead with their purchase because they were told they could expect to make a profit. In fact, Mr and Mrs H were asked to give their “main reasons” for entering the agreement at the Time of Sale 2 and they have written: “Fractional points offered a definitive exit from our timeshare and this sale had allowed us to convert 45,000 of our 50,000 points with fractionals.” So, Mr and Mrs H have not given the prospect of making a profit as one of the reasons why they entered the agreement at the Time of Sale 2. And when I consider this alongside the contents of the PR’s Letter of Complaint, which does not make any allegation that the Supplier sold its memberships in that way during both sales, I remain of the position set out in the provisional decision that any breach of Regulation 14(3) by the Supplier was not an important factor in Mr and Mrs H’s decisions to enter the agreements. On balance, therefore, for the reasons I’ve set out above, I don’t think the credit relationships between Mr and Mrs H and the Lender were unfair to them even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Times of Sale 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 on 12 January 2026. 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 on 12 January 2026, 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 H under the Credit Agreement and related Purchase Agreement unfair for the purposes of Section 140A. As I’ve already indicated, the case law on Section 140A makes it clear that it does not automatically follow that regulatory breaches create unfairness for the purposes of the unfair relationship provisions. The extent to which such mistakes render a credit relationship unfair must also be determined according to their impact on the complainant. So, even if it could be said that the Supplier failed to give Mr and Mrs H sufficient information, in good time, in order to satisfy the requirements of Regulation 12 of the Timeshare Regulations for some of the reasons the PR gives, neither they nor the PR have persuaded me that they were deprived of information that would have led them to make a different purchasing decision at the Times of Sale when I’ve already found that the prospect of a financial gain from the Allocated Properties was not an important and motivating factor behind their purchases. And with that being the case, even if there were information failings (which I make no formal finding on), I can’t see why that could be said to have rendered the

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credit relationships in question unfair to them. Conclusion Having adopted my provisional findings, and reconsidered the facts and circumstances of this complaint, I still I don’t think the Lender acted unfairly or unreasonably when it dealt with Mr and Mrs H’s section 75 claims. I’m still not persuaded that the Lender was party to credit relationships with Mr and Mrs H that were unfair to them for the purposes of section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable for me to direct the Lender to compensate Mr and Mrs H. My final decision I do not uphold Mr and Mrs H’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr H and Mrs H to accept or reject my decision before 28 April 2026. Andrew Anderson Ombudsman

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