Clydesdale Financial Services Limited · DRN-6249736

The complaint Miss F’s complaint is, in essence, that Clydesdale Financial Services Limited, trading as Barclays Partner Finance, (the ‘Lender’) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with her under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying claims under Section 75 of the CCA. What happened Miss F was the member of a timeshare provider (the ‘Supplier’) – having purchased a number of products from it over time. But the product at the centre of this complaint is her membership of a timeshare that I’ll call the ‘Fractional Club’ – which she bought on 23 May 2016 (the ‘Time of Sale’). She entered into an agreement with the Supplier to buy 850 fractional points at a cost of £10,538 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Miss F 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 her membership term ends. Miss F paid for her Fractional Club membership by taking finance of £14,533 from the Lender (the ‘Credit Agreement’). This included an amount to consolidate a previous loan. Miss F – using a professional representative (the ‘PR’) – wrote to the Lender on 7 September 2022 (the ‘Letter of Complaint’) to raise a number of different concerns. Since then the PR has raised some further matters it says are relevant to this outcome of the complaint. As both sides are familiar with the concerns raised, it isn’t necessary to repeat them in detail here beyond the summary above. The complaint was ultimately 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, barring the complaint about unaffordable lending which the Investigator believed fell outside this service’s jurisdiction as per the rules we must follow, and so couldn’t be considered. Miss F disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me. Having reviewed the file afresh, I issued a provisional decision (PD) and gave the parties the opportunity to respond before I reconsidered the complaint. The PD included the following: ‘The legal and regulatory context In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is, in many ways. no

-- 1 of 10 --

different to that shared in several hundred published ombudsman decisions on very similar complaints – which can be found on the Financial Ombudsman Service’s website. And with that being the case, it is not necessary to set out that context in detail here. 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. I’ve also read and considered all the available evidence and arguments to decide whether the Financial Ombudsman Service’s jurisdiction permits me to consider the entire subject matter of this complaint. Having done so, I conclude that: 1. Contrary to the findings of the Investigator, this service has the jurisdiction to consider Miss F’s complaint unaffordable lending, together with the rest of her complaint. 2. In line with the other findings of the Investigator, and for the reasons I give below, I don’t think any aspects of the complaint should succeed. I’ll explain my reasons for my conclusions below. … 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 Time of Sale Section 75 creates a financial liability that the creditor is bound to pay. Liability under Section 75 isn’t based on anything the lender does wrong, but upon the misrepresentations and breaches of contract by the supplier, for which Section 75 imposes on the lender a “like claim” to that which the borrower enjoys against the supplier. If the lender is notified of a valid Section 75 claim, it should pay its liability. And if it fails or refuses to do so, that failure or refusal can give rise to a complaint to the Financial Ombudsman Service. As a general rule, creditors can reasonably reject Section 75 claims that they are first informed about after the claim has become time-barred under the Limitation Act 1980 (the ‘LA’) as it wouldn’t be fair to expect creditors to look into such claims so long after the liability arose and after a limitation defence would be available in court. So, it is relevant to consider whether Miss F’s Section 75 claim for misrepresentation was time-barred under the LA before she put it to the Lender. A claim for misrepresentation against the Supplier would ordinarily be made under Section 2(1) of the Misrepresentation Act 1967. And the limitation period to make such a claim expires six years from the date on which the cause of action accrued (see Section 2 of the LA). But a claim, like the one in question here, under Section 75 is also ‘an action to recover any sum by virtue of any enactment’ under Section 9 of the LA. And the limitation period under that provision is also six years from the date on which the cause of action accrued. The date on which the cause of action accrued was the Time of Sale. I say this because

-- 2 of 10 --

Miss F entered into the purchase of her timeshare at that time based on the alleged misrepresentations of the Supplier – which she says were relied upon. And as the loan from the Lender was used to help finance the purchase, it was when she entered into the Credit Agreement that she suffered a loss. Miss F first notified the Lender of her Section 75 claim on 7 September 2022. And as more than six years had passed between the Time of Sale and when that claim was first put to the Lender, I don’t think it was unfair or unreasonable of the Lender not to accept Miss F’s concerns about the Supplier’s alleged misrepresentations. Section 75 of the CCA: the Supplier’s Breach of Contract I have already summarised how Section 75 of the CCA works and why it gives consumers a right of recourse against a lender. So, it is not necessary to repeat that here other than to say that, if I find that the Supplier is liable for having breached the Purchase Agreement, the Lender is also liable. Miss F says that she could not holiday where and when she wanted to. That was framed, in the Letter of Complaint, as an alleged misrepresentation. However, on my reading of the complaint, this suggests that the Supplier was not living up to its end of the bargain, potentially breaching the Purchase Agreement. Yet, like any holiday accommodation, availability was not unlimited – given the higher demand at peak times, like school holidays, for instance. Some of the sales paperwork likely to have been signed by Miss F states that the availability of holidays was/is subject to demand. It also looks like she made use of her fractional points to holiday. I accept that she may not have been able to take certain holidays. But I have not seen enough to persuade me that the Supplier had breached the terms of the Purchase Agreement. So, from the evidence I have seen, I do not think the Lender is liable to pay Miss F 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 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. Having considered the entirety of the credit relationship between Miss F 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. The commission arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements; 4. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale;

-- 3 of 10 --

5. The inherent probabilities of the sale given its circumstances; and 6. Any existing unfairness from a related credit agreement. I have then considered the impact of these on the fairness of the credit relationship between Miss F and the Lender given her circumstances at the Time of Sale. The Supplier’s sales & marketing practices at the Time of Sale Miss F’s complaint about the Lender being party to an unfair credit relationship was and is made for several reasons. They include, allegations that: 1. Miss F was pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale. 2. the right checks weren’t carried out before the Lender lent to Miss F. 3. the loan interest was excessive. 4. Miss F was not given a choice of lender by the Supplier. However, as things currently stand, none of these strike me as reasons why this complaint should succeed. I acknowledge that Miss F may have felt weary after a sales process that went on for a long time. But she says little about what was said and/or done by the Supplier during her sales presentation that made her feel as if she had no choice but to purchase Fractional Club membership when she simply did not want to. She was also given a 14-day cooling off period and she has not provided a credible explanation for why she did not cancel her membership during that time. And with all of that being the case, there is insufficient evidence to demonstrate that Miss F made the decision to purchase Fractional Club membership because her ability to exercise that choice was significantly impaired by pressure from the Supplier. I haven’t seen anything to persuade me that the right checks weren’t carried out by the Lender given this complaint’s circumstances. But even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied that the money lent to Miss F was actually unaffordable before also concluding that she lost out as a result and then consider whether the credit relationship with the Lender was unfair to her for this reason. I realise Miss F’s loan account went into arrears but that didn’t happen until almost three years after it was opened. So that in itself isn’t evidence that the loan was unaffordable for her at the Time of Sale. From the information provided, I am not satisfied that the lending was unaffordable for Miss F. The PR has not explained how, if it were true, Miss F not being offered a different lender to pay for Fractional Club membership caused her any unfairness or financial loss. Miss F was aware of the interest rate set out on the face of the Credit Agreement, as well as the term of the loan and the monthly repayments, so she understood what it was she was taking out. Further, I don’t think the rate of interest was excessive, compared either to other rates available from other point-of-sale lenders or on the open market, so I can’t say it would be fair or reasonable to tell the Lender to do anything because of this. Overall, therefore, I don’t think that Miss F’s credit relationship with the Lender was rendered unfair to her under Section 140A for any of the reasons above. But there is another reason, perhaps the main reason, why the PR now says the credit relationship with the Lender was

-- 4 of 10 --

unfair to her. And that’s the suggestion that Fractional Club membership was marketed and sold to her 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 Miss F’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. This is what the provision said at the Time of Sale: “A trader must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment if the proposed contract would be a regulated contract.” But the PR says that the Supplier did exactly that at the Time of Sale – saying, in summary, that Miss F was told by the Supplier that Fractional Club membership was the type of investment that would only increase in value. The term “investment” is not defined in the Timeshare Regulations. But for the purposes of this provisional decision, and by reference to the decided authorities, an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit. A share in the Allocated Property clearly constituted an investment as it offered Miss F the prospect of a financial return – whether or not, like all investments, that was more than what she 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.1 In other words, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. To conclude, therefore, that Fractional Club membership was marketed or sold to Miss F as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to her as an investment, i.e. told her or led her to believe that Fractional Club membership offered her the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Time of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations. On the one hand, it is clear that the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Miss F, the financial value of her share in the net sales proceeds of the 1 The PR has argued that Fractional Club membership amounted to an Unregulated Collective Investment Scheme, however this was considered and rejected in the judgment in R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin).

-- 5 of 10 --

Allocated Property along with the investment considerations, risks and rewards attached to them. On the other hand, I acknowledge that the Supplier’s sales process left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s equally possible that Fractional Club membership was marketed and sold to Miss F as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Was the credit relationship between the Lender and Miss F rendered unfair? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I now need to consider what impact that breach had on the fairness of the credit relationship between Miss F and the Lender under the Credit Agreement and related Purchase Agreement as the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. Indeed, it seems to me that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Miss F and the Lender that was unfair to her and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led her to enter into the Purchase Agreement and the Credit Agreement 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 Miss F decided to go ahead with her purchase. I say that having considered the available testimony in the form of a typed statement, which is unsigned and undated and appears to be from Miss F. The statement was provided to this service in January 2024, but I can’t say on balance when it was made. The statement includes the following: ‘... in June 2016 I again attended a [seminar with the Supplier] about transferring the Trial Membership to a Full Membership. The proposition was by upgrading to a Fractional Timeshare at a cost of £10,538.00, we could have access to fantastic holidays, and also benefit as it was an investment we could sell in the future. The… staff explained that this purchase was only for a specific period when it would have to be sold, but after 2 years we could sell earlier than the end of the contractual period, if we wished. This purchase was also funded by a Barclays Loan they arranged, which consolidated the previous loan for the Trial Membership. It was the sale value of the Timeshare that made the overall cost minimal, when they compared the cost of different holidays over a number of years, by comparing their costs with Travel Agents and Online Holiday companies. … We had been told by … staff there would never be a problem booking accommodation, which was seldom the case. Nothing was quite like it was explained in the seminar meetings and I have been disappointed with the overall experience.’ While the suggestion from the PR is that Miss F agreed to purchase Fractional Club

-- 6 of 10 --

membership as an investment, I don’t consider that the evidence above indicates that she did so for financial gain or profit. Rather Miss F indicated that she was hopeful of some money back and, more importantly, having ‘access to fantastic holidays’ as she put it. It was problems Miss F encountered in booking her preferred holidays that appear to have driven her dissatisfaction with the Fractional Club membership and, ultimately, her complaint about it. I think the words of the PR in its Letter of Complaint are relevant in considering what led Miss F into purchasing the product: ‘They purchased the Fractional product as advised by [the Supplier] so that they could get a better quality of holiday and availability would be better.’ In May 2025 the PR provided copy handwritten notes, dated 22 February 2022, purportedly made during or following a call with Miss F. Like the written statement, the call notes reference the investment aspect but, also like the written statement, they emphasise that the hope of better accommodation and availability was her motivation in going ahead with the purchase. I also reviewed a copy third-party timeshare relinquishment claim form dated 18 February 2022. This mentions ‘money back’ but doesn’t suggest Miss F was expecting a potential profit. So, while these documents might suggest the Fractional Club was sold as an investment, I find it difficult to read into them that Miss F had any expectation of making a profit on her initial outlay. It’s reasonable to think that, if Miss F did recall this as an important feature of the sale for her, then this would have been included in her recollection of events. That doesn’t mean Miss F wasn’t interested in a share in the Allocated Property. After all, that wouldn’t be surprising given the nature of the product at the centre of this complaint. But as Miss F herself doesn’t persuade me that her purchase was motivated by her share in the Allocated Property 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 she ultimately made. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Miss F’s decision to purchase Fractional Club membership at the Time of Sale was motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests she would have pressed ahead with her purchase whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationship between Miss F and the Lender was unfair to her even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Time of Sale The PR suggests that Miss F was not given sufficient information at the Time of Sale by the Supplier about membership, including about the ongoing costs of Fractional Club membership and the fact that Miss F’s heirs could inherit these costs. 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 Miss F sufficient information, in good time, on the various charges she could have been subject to as a

-- 7 of 10 --

Fractional Club member in order to satisfy the requirements of Regulation 12 of the 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 Miss F nor the PR have persuaded me that she would not have pressed ahead with her 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 facts and circumstances. As for the PR’s argument that Miss F’s heirs would inherit the on-going management charges, I fail to see how that could be the case or that it could have led to an unfairness that warrants a remedy. Section 140A: Conclusion Given all of the factors I’ve looked at in this part of my decision, including the relevant relationships, arrangements and payments between the Lender and the Supplier and having taken all of them into account, I’m not persuaded that the credit relationship between Miss F and the Lender under the Credit Agreement and related Purchase Agreement was unfair to her. And as things currently stand, I don’t think it would be fair or reasonable that I uphold this complaint on that basis. Overall Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that the Lender acted unfairly or unreasonably when it dealt with Miss F’s Section 75 claims, and I am not persuaded that the Lender was party to a credit relationship with her under the Credit Agreement and Purchase Agreement that was unfair to her for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate her.’ The Lender confirmed that it accepted the PD and had nothing further to add. The PR said it did not accept the PD and provided some further comments and evidence it wished to be considered regarding the merits of the complaint. Having received the relevant responses from both parties, I’m now finalising my decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Following the responses from both parties, I’ve considered the case afresh and having done so, I’ve reached the same decision as that which I outlined in my provisional findings, for broadly the same reasons. Again, my role as an Ombudsman isn’t to address every single point which has been made to date, but to decide what is fair and reasonable in the circumstances of this complaint. If I haven’t commented on, or referred to, something that either party has said, this doesn’t mean I haven’t considered it. Rather, I’ve focused here on addressing what I consider to be the key issues in deciding this complaint and explaining the reasons for reaching my final decision.

-- 8 of 10 --

The PR’s further comments in response to the PD only relate to the issue of whether the credit relationship between Miss F and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Miss F as an investment at the Time of Sale. As outlined in my PD, the PR originally raised various other points of complaint, all of which I addressed at that time. But it didn’t make any further comments in relation to those in its response to my PD. Indeed, it hasn’t said it disagrees with any of my provisional conclusions in relation to those other points. On that basis, I see no reason to change my conclusions in relation to them as set out in my PD. So, I’ll focus here on the PR’s points raised in response. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations The PR has provided its further thoughts as to Miss F’s likely motivations for purchasing Fractional Club membership. I recognise it has interpreted Miss F’s testimony differently to how I have and thinks it points to her having been motivated by the prospect of a financial gain from Fractional Club membership. But I’m not persuaded that the evidence supports the PR’s position on the matter. In my provisional decision I explained the reasons why I didn’t think Miss F’s purchase was motivated by the prospect of a financial gain (i.e., a profit). The PR says that, when considered as a whole, the evidence demonstrates she was induced into the Purchase and Credit Agreements by the promise of an investment that would bring a profit. Although I have carefully considered the PR’s arguments in this regard, including the additional context it’s attempted to provide, I’m not persuaded the conclusion I reached on this point was unfair or unreasonable. I’ve considered the available evidence as a whole, but I still think it reasonable to place emphasis on Miss F’s written statement as being the truest reflection of her recollections of the Time of Sale. And the written statement suggests to me that Miss F was strongly motivated by gaining access to ‘fantastic holidays’. I don’t dispute that investing was a factor for Miss F in entering into the purchase. However, the evidence indicates to me on balance that Miss F was expecting some money back on her initial outlay rather than a profit. So, ultimately, for the above reasons, along with those I already explained in my PD, I remain unpersuaded that any breach of Regulation 14(3) was material to Miss F’s purchasing decision. And for that reason, I do not think the credit relationship between Miss F and the Lender was unfair to her even if the Supplier had breached Regulation 14(3). S140A conclusion Given all of the factors I’ve looked at in this part of my decision, including the relevant relationships, arrangements and payments between the Lender and the Supplier and having taken all of them into account, I’m not persuaded that the credit relationship between Miss F and the Lender under the Credit Agreement and related Purchase Agreement was unfair to her. So, I don’t think it is fair or reasonable that I uphold this complaint on that basis. Overall conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that the Lender acted unfairly or unreasonably when it dealt with Miss F’s Section 75 claims. I am not

-- 9 of 10 --

persuaded that the Lender was party to a credit relationship with her under the Credit Agreement and related Purchase Agreement that was unfair to her for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate her. My final decision For the above reasons, my final decision is that I don’t uphold the complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss F to accept or reject my decision before 22 April 2026. Nimish Patel Ombudsman

-- 10 of 10 --