Shawbrook Bank Limited · DRN-6205768

The complaint Mr and Mrs L complain about a loan (the “Credit Agreement”) provided to them by Shawbrook Bank Limited (the “Lender”), which was used to purchase a timeshare (“Fractional Club membership”). What happened On 19 July 2012 (the ‘Time of Sale’), Mr and Mrs L purchased Fractional Club membership from a timeshare provider (the “Supplier”). This provided 738 Fractional Points each year, which could be spent on holidays with the Supplier and its affiliates (I will refer to the timeshare contract as the “Purchase Agreement”). Mr and Mrs L paid for this using the Credit Agreement, which was in their joint names and covered the full £10,999 purchase price. Fractional Club membership was asset backed – which meant it gave Mr and Mrs L 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 L did not need to stay in the Allocated Property, as their Fractional Points could be used to book any accommodation in the Supplier’s portfolio. The link to the Allocated Property was just a way of allowing Mr and Mrs L to get some money back at the end of the membership term. Mr and Mrs L did not use their Fractional Points to take any holidays. They took a bonus holiday with the Supplier about a year after the sale (for a small fee), at which point the Supplier attempted to persuade them to purchase more Fractional Points. They say they were told at that time that their Fractional Club membership only provided a one-bed apartment, which would not accommodate their family of five. In October 2013, Mr and Mrs L complained to the Supplier. Primarily this complaint was because they had been unable to book the holidays shown on a Holiday Planner that had been completed at the Time of Sale. The Supplier rejected the complaint. Mr and Mrs L wrote to the Lender around November 2013, seeking to settle the loan for about half the amount borrowed, because they felt that the Supplier had mis-sold Fractional Club membership to them. The Lender rejected the settlement offer and Mr and Mrs L complained to the Supplier due to (according to a Supplier Dissatisfaction Form completed on 14 June 2014): 1. Not being able to book chosen destinations in the school holidays despite having been assured of availability (so long as they booked in advance). 2. Having unsuccessfully tried to book certain holidays about a year in advance, Mr and Mrs L believed they could not use the membership.

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In September 2014, Mr and Mrs L signed an agreement to surrender their Fractional Club membership. This meant they were no longer members and could not use it for holidays – but no longer had to pay annual management charges. However, they received no refund and Mr and Mrs L remained liable for repaying the Credit Agreement. In October 2014, Mr and Mrs L told the Lender that the Supplier had known at the time of sale that they could not afford the loan repayments. On 10 November 2014, the Lender issued its final response to the complaint, which Mr and Mrs L then referred to the Financial Ombudsman Service sometime in 2015. We have limited information about that complaint – given the time that has passed our records have been deleted. But the Lender provided its notes from around that time. It appears the complaint was referred to the Financial Ombudsman Service outside of the six-month time limit allowed following the Lender’s final response, so it was outside of our jurisdiction to consider, and we did not investigate it. On 23 February 2022, Mr and Mrs L spoke to the Lender again and mentioned that they felt Fractional Club membership had been mis-sold. Following this, the Supplier told the Lender that it appeared to be a repeat of the complaint made in 2013. On 20 April 2022, the Lender wrote to Mr and Mrs L to explain that their claim had been made too late given the provisions of the Limitation Act 1980, which provided only six years to make the claim from the Time of Sale. And as such the Lender would not investigate the claim further. Mr and Mrs L complained over the phone to the Lender about its response on 16 January 2023. Having not received a response to the complaint, they then referred the matter to the Financial Ombudsman Service on 21 April 2023. They said that: 1. Fractional Club membership was sold to them not as a timeshare but as a property investment. 2. The sales presentation went on all day when they were separated from their children – in the end Mr and Mrs L were tired and stressed and just agreed to the purchase. 3. At the Time of Sale Mr and Mrs L didn’t think they could afford the loan repayments because they were planning to move to a bigger house, but the Supplier offered to pay them £120 per month for ten months to help with the cost. 4. They weren’t given a choice of lender. 5. When speaking with the Supplier while on holiday in 2013, the Supplier said Fractional Club membership had been mis-sold because the Allocated Property was a one-bed apartment that was not big enough for their family – and that they should buy more Fractional Points, which they refused to do. 6. Mr and Mrs L say they tried to book holidays using their Fractional Points but there was no availability for what they wanted – because of the children they were limited to travelling during the school holidays. When we contacted the Lender, it informed us that it had issued a final response to the complaint on 10 November 2014. It later said the points made to it by Mr and Mrs L during the phone call on 16 January 2023 were as follows: 1. Fractional Club membership was mis-sold. 2. They were pressured into the purchase.

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3. They weren’t given an opportunity to read the Credit Agreement. 4. They were not given a choice of lenders. 5. They never used Fractional Club membership due it not being suitable and a lack of availability. The Lender pointed out that Mr and Mrs L had not made an allegation about Fractional Club membership being sold as an investment until recently. Our Investigator assessed the complaint and rejected it, saying that: 1. Parts of the complaint could not be considered as Mr and Mrs L complained about them before and they did not refer them to the Financial Ombudsman Service in time. 2. Mr and Mrs L’s allegation that Fractional Club membership had been sold as an investment had not been raised before, so we could consider this as a complaint about an unfair relationship considering Section 140A of the Consumer Credit Act 1979 (the “CCA”). But that complaint should not succeed. 3. Mr and Mrs L’s complaint about unaffordable lending had been made too late, as they had been aware the Lender (or the Supplier as its agent) had possibly done something wrong in relation to this at the time of sale. Mr and Mrs L did not accept our Investigator’s assessment, so the complaint has been passed to me for a decision. I issued a provisional decision explaining that I was not planning to uphold the complaint. The Lender accepted my provisional decision. Mr and Mrs L disagreed with my provisional decision and provided some comments they wanted me to consider when making my final 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 to my provisional decision, I’ve considered the case afresh. Having done so, I’ve reached the same decision as that which I outlined in my provisional findings – and for broadly the same reasons. A copy of my provisional findings is below. I do not uphold this complaint. START OF COPY OF PROVISIONAL FINDINGS I appreciate this has been a long running saga for Mr and Mrs L. And I would like to start by apologising for how long it has taken the Financial Ombudsman Service to deal with the matter. We have received thousands of complaints about timeshares, and there have been legal proceedings and other complexities which have held up our resolution of these complaints. But I hope my provisional decision, and my final decision when I issue it, can bring this matter to a close for all involved. Having considered all the circumstances and evidence in this complaint, I have decided not to uphold it. I appreciate Mr and Mrs L will be disappointed by this. But I hope my explanation as to why will provide some clarity for them – and that they will be reassured that I have really thought carefully about everything they have said before reaching my decision.

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My role as an Ombudsman is not to address every single point that has been made to date. 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 essence, Mr and Mrs L’s complaint is that they purchased Fractional Club membership, were unable to use it as they expected, were unable to withdraw from the purchase, and have been left paying back the Credit Agreement even after surrendering their Fractional Club membership. The question I must answer is – did something go wrong that justifies me upholding this complaint against the Lender? In doing so, I must consider what is in my opinion fair and reasonable in the circumstances of this complaint. Section 75 of the CCA Section 75 essentially means that a credit provider can be held liable for misrepresentations and breaches of contract by a supplier where goods or services have been paid for using credit. In this case, Section 75 applies because the Credit Agreement was used to pay for Mr and Mrs L’s Fractional Club membership. Where a creditor rejects a Section 75 claim, a customer can complain about this to the Financial Ombudsman Service. However, here this is complicated by the fact that Mr and Mrs L complained about these matters in 2014 and failed to refer the complaint to the Financial Ombudsman Service in time. It seems to me that Mr and Mrs L’s original claim was likely based on Section 75 of the CCA (or at least that is how the Lender interpreted it) – that the Supplier had misrepresented Fractional Club membership (by making representations about it which were not true and induced them to enter the Purchase Agreement) or that the Supplier breached the Purchase Agreement because Mr and Mrs L could not book the holidays they wanted at the times they wanted to take them. Because Mr and Mrs L received a final response to that complaint from the Lender and did not refer it to the Financial Ombudsman Service in time, I cannot consider whether the Lender acted unfairly or unreasonably by rejecting their Section 75 claims. However, I have considered the Supplier’s actions at the time of sale in the below section, “Unfair credit relationship”. Unfair credit relationship Mr and Mrs L’s current complaint appears to allege there was or is an unfair relationship between them and the Lender1. The time limits for making such claims and complaints differ to those for a Section 75 claim and complaint. Our jurisdiction A consumer can make a complaint about an unfair relationship up until six years after the relationship ends. In the case of a loan such as the Credit Agreement, the relationship ends when the loan is paid off. In this case, the loan was still running in 2023. So, a complaint about this is still in time for the purposes of our jurisdiction. And it appears to me that Mr and Mrs L’s complaint amounts to an allegation that their relationship with the Lender is unfair. That means I can consider their complaint. 1 When considering Section 140A of the CCA.

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Misrepresentations and breaches of contract If the Supplier misrepresented Fractional Club membership to Mr and Mrs L or breached the Purchase Agreement, this may have contributed to or created an unfair credit relationship. So, I can consider Mr and Mrs L’s concerns about this when looking at whether there was an unfair relationship. However, having done so, I’m not persuaded the Supplier misrepresented Fractional Club membership to Mr and Mrs L nor that it breached the Purchase Agreement such that it created an unfair relationship between Mr and Mrs L and the Lender. Mr and Mrs L have said they were assured there would be high availability of holidays (including in school holidays which is when they would need to travel) if they booked in advance. But I am not persuaded there was any guarantee of availability. I can see that Mr and Mrs L could make reservations up to 24 months in advance (as shown in documents they were likely provided with at the time of sale or shortly afterwards). And that the documents also explained that bookings were subject to availability and provided on a first come first served basis. I understand Mr and Mrs L didn’t attempt to make any reservations until they’d had Fractional Club membership for about one year. And then their attempts to make bookings were made only up to one year in advance. And while they couldn’t book the resorts they wanted to, others were available (albeit they did not want to book those). So, it is not the case there was no availability of suitable holidays at the times they required. Overall, I am not persuaded there was any misrepresentation or breach of contract by the Supplier. So, while I recognise that Mr and Mrs L have concerns about the way in which Fractional Club membership was sold by the Supplier, I don’t think there was any misrepresentation or breach of contract that would create an unfair relationship between Mr and Mrs L and the Lender. Unaffordable lending Mr and Mrs L say they could not afford the loan, and the Supplier (and therefore the Lender) was aware of this at the time 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 Mr and Mrs L was actually unaffordable before also concluding that they lost out as a result – and then consider whether their credit relationship with the Lender was unfair to them for this reason. But from the information provided, I am not persuaded that the lending was unaffordable for the Mr and Mrs L at the time of sale. While the Supplier provided an incentive (a £120 monthly payment for ten months, which it described in its confirmation letter as a “contribution towards your first year’s holidays”), I am not persuaded this was because the Supplier thought Mr and Mrs L could not otherwise afford the loan repayments. I note that Mr and Mrs L did fall into a small amount of arrears on their loan repayments between October 2013 and December 2014. But this coincided with Mr and Mrs L first

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making their complaint about Fractional Club membership to the Lender. Its notes2 from the time say that Mr and Mrs L had refused to pay off the arrears until their complaint was resolved (suggesting they could have afforded to do so and/or that the arrears may have arisen or persisted due to their dissatisfaction rather than their being unable to afford the repayments). In any case, there is insufficient evidence to persuade me that the Lender would’ve foreseen at the time of sale that Mr and Mrs L would be unable to keep up with the loan repayments. Mr and Mrs L have confirmed that they moved house in December 2012, at which point their mortgage repayments and childcare costs increased (which they say they anticipated at the time of sale as they were looking for a bigger house). Mr and Mrs L say they had been in touch with Estate Agents with a view to selling their property at the time of sale, but that they did not put their house on the market until September 2012. This was about two months after the time of sale. I have seen insufficient evidence that Mr and Mrs L informed the Supplier that they expected this change in circumstances, such that the Lender ought to have been informed of it or taken it into account when making its lending decision (which would’ve been difficult given the exact change in housing costs cannot have been known until later). Indeed, of the parties involved, Mr and Mrs L were in the best position to understand what effect this might have. And they made the purchase and took out the loan knowing how much that would cost (per month and over the 15-year loan term) and what their plans were with regards to moving house (and how that might affect their finances). Even if Mr and Mrs L viewed the £120 per month from the Supplier to be something to help with the loan repayments (as opposed to a contribution towards their holiday costs), I am not persuaded by their suggestion that the Supplier arranged the meeting in 2013 with a view to finding some solution to their allegedly anticipated problems repaying the loan. It appears they had essentially been offered a free week’s holiday3 in exchange for attending a meeting with the Supplier (which generally involved seeing if a member was interested in upgrading their membership – albeit Mr and Mrs L may not have realised that beforehand). Overall, I am not persuaded the lending was unaffordable. Pressure I acknowledge that Mr and Mrs L 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 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. Overall, there is insufficient evidence to demonstrate that Mr and Mrs L made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. Information on the Credit Agreement and choice of lenders My understanding of the sales process is that customers would’ve been given the opportunity to look at the relevant documents and ask questions prior to signing them. Mr 2 A copy of this note is at the end of this decision. 3 On reviewing the file following my provisional decision, my understanding is now that Mr and Mrs L had to pay a small fee to book this holiday, so technically it was not free.

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and Mrs L have not said that, given more time, they would not have gone ahead with the purchase or the Credit Agreement. They also had the 14-day cooling off period in which they could’ve read the Credit Agreement in their own time and/or cancelled it. Similarly, Mr and Mrs L have not explained how not being offered a different lender to pay for Fractional Club membership caused them any unfairness or financial loss. Mr and Mrs L were aware of the interest rate as set out on the face of the Credit Agreement, as well as the term of the loan, the monthly repayments and total amount payable. They could also have repaid the loan at any time without penalty – which means if they had found a cheaper personal loan elsewhere, for example, they could’ve used this to pay off the Credit Agreement. So, I am not persuaded that Mr and Mrs L’s allegations about the information on the Credit Agreement and the lack of a choice of lender created an unfair relationship. Fractional Club membership was sold as an investment (not a timeshare) Mr and Mrs L’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations4. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. But Mr and Mrs L now say that the Supplier did exactly that at the time of sale. The term “investment” is not defined in the Timeshare Regulations. For the purposes of this decision, 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 could constitute an investment as it offered Mr and Mrs L the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But the fact that Fractional Club membership included an investment element did not 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. 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 that Fractional Club membership was marketed or sold to Mr and Mrs L as an investment in breach of Regulation 14(3), I have to be persuaded that the Supplier marketed and/or sold membership to them as an investment – that is, told them or led them to believe that Fractional Club membership offered them the prospect of a financial gain (that is, 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, the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Mr and Mrs L, the financial value of their share in the net sales proceeds of the Allocated Property along with the investment considerations, risks and rewards attached to them. 4 The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010

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On the other hand, the Supplier’s sales process left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s equally possible that Fractional Club membership was marketed and sold to Mr and Mrs L as an investment in breach of Regulation 14(3). However, for reasons I’ll come on to, whether there was a breach of the relevant prohibition by the Supplier does not affect the outcome in this complaint. And with that being the case, it’s not necessary to make a formal finding on that issue. Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the time of sale, I need to consider what impact that breach had on the fairness of the credit relationship between Mr and Mrs L and the Lender. This is because regulatory breaches do not automatically create unfairness. Such breaches and their consequences (if there are any) must be considered in the round. If I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr and Mrs L and the Lender that was unfair to them and warranted relief as a result, it is important to consider whether the Supplier’s breach of Regulation 14(3) led Mr and Mrs L to enter into the Purchase Agreement and the Credit Agreement. 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 L decided to go ahead with their purchase. I say this because: 1. Mr and Mrs L did not mention being told this until 2023 – over ten years after the time of sale. Recollections so long after the event are more likely to have evolved or be influenced by outside information (such as contact from claims management companies or publicly available information – for example online – which made clear that selling timeshares as an investment was not allowed, or that some people’s complaints were successful for this reason). 2. Mr and Mrs L did not mention this in their initial complaint in 2013 and 2014 (or any other time before 2023). Their initial complaint was made much closer to the time of sale and so is more likely to be an accurate reflection of what happened and what was important to them at the time of sale. 3. Had the investment element of Fractional Club membership been an important factor in Mr and Mrs L’s decision to purchase, I would have expected them to mention this in 2013 or 2014. Particularly as Mr and Mrs L were willing to give up any investment return by surrendering their Fractional Club membership for no refund. That doesn’t mean Mr and Mrs L weren’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 Mr and Mrs L doesn’t persuade me that their purchase was motivated by their 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 material to the decision they ultimately made. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr and Mrs L’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 they would have pressed ahead with their purchase whether or not there had been a breach of Regulation 14(3). And for that reason, I do not

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think the credit relationship between Mr and Mrs L and the Lender was unfair to them even if the Supplier had breached Regulation 14(3). Was Fractional Club membership fundamentally unsuitable for Mr and Mrs L? I have considered this question given Mr and Mrs L’s concerns about the Allocated Property being a one-bed apartment unsuited to a family of five and/or the number of annual Fractional Points sold to them (738) being potentially insufficient to obtain accommodation during the school holidays. Firstly, Mr and Mrs L did not gain the right to stay in the Allocated Property. So, it does not matter what type of property it was. Different types of apartments equated to a different number of Fractional Points. However, a one-bed apartment equates to a relatively low number of Fractional Points compared to some Fractional Club memberships that I have seen, so I have given this some thought. I have looked at the holiday planner Mr and Mrs L completed during the sale, as well as the Supplier’s resort directory, to see if 738 Fractional Points was simply insufficient for Mr and Mrs L’s needs. But I am not persuaded that they were. My understanding is that the holiday planner was used during the sale to show prospective customers the type of holidays they could purchase using their Fractional Points. It was not in any way a promise that a customer could take those exact holidays at those exact times. If Mr and Mrs L had wanted to secure those holidays, they would’ve needed to book them once they became a member. And they have confirmed that they did not attempt to do so until about a year after the time of sale. Had they attempted to book the first two years of holidays immediately on becoming a member, it is possible they may have secured the holidays they wanted. I can see that the holiday planner included 1,000 bonus Fractional Points that were provided as an incentive at the time of sale. And the holidays shown cost the following amounts: 1. Year one: 800 points (although Mr and Mrs L were provided a voucher for 75% off, so this would only have cost 200 points if it had been booked using the voucher). 2. Year two: 760 points 3. Year three: 1,330 points While all these holidays cost (at full price) more than the 738 annual points Mr and Mrs L purchased, the holiday planner clearly shows this. It shows that Mr and Mrs L were aware of the 1,000 bonus points, the discount voucher and that they could carry over points to, or borrow points from, the following year5. Mr and Mrs L also had access to one free upgrade per year, which would’ve reduced the points price of a booking, so this could’ve made more resorts and holidays affordable for Mr and Mrs L – even without carrying over or borrowing points from other years. Overall, it does not appear to me that the Supplier hid the potential limitations of the amount of annual Fractional Points Mr and Mrs L purchased. The holiday planner showed that Mr and Mrs L could carry over 1,024 points into year four if they had taken the holidays shown. So, it was not the case that the holidays shown on the planner were entirely reliant on them 5 The Owner’s Guide Mrs L would’ve been provided shows they could carry over Fractional Points for up to three years or borrow Fractional Points up to 12 months in advance. They could also make use of one free upgrade per year (which would make holidays cheaper than the full points price).

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having the bonus points (which were a one-off and had to be used within a specified timeframe). I have also looked at the resort directory, which Mr and Mrs L would have had access to as a member. 738 Fractional Points would not have always been enough to book at every resort during school holidays – and some resorts may have been unaffordable (at least at full price). But, as mentioned above, the Fractional Points did have some flexibility in when and how they could be used. Mr and Mrs L had access to one free upgrade a year. And the Supplier often had special offers that reduced the number of points required to make a booking. Overall, despite the potential limitations of the number of Fractional Points Mr and Mrs L purchased, I do not think I can reasonably conclude that the membership sold to them was fundamentally unsuitable – such that it rendered their relationship with the Lender unfair to them. I appreciate what Mr and Mrs L have said about the Supplier admitting it had mis-sold them Fractional Club membership. But I am not persuaded that it would have done so – or that it did, given they did not mention this when complaining to the Supplier in their email of 30 October 2013. Rather, it seems likely that during the meeting in 2013 the Supplier’s representative may have highlighted the limitations of their membership with a view to selling them an upgrade (that is, more Fractional Points). While Mr and Mrs L may have taken this to mean that there had been a mis-sale, I am not persuaded the Supplier said there had been or that there actually was. I appreciate that Mr and Mrs L have come to view the purchase as a bad one, but I cannot uphold a complaint merely because a customer regrets their decision to purchase. I would need to find that the Lender or the Supplier did something wrong that meant the relationship between Mr and Mrs L and the Lender was unfair to them. And I simply have not found anything that has persuaded me that would be a fair and reasonable outcome. Commission arrangements between the Lender and Supplier I have considered the commission arrangements between the Lender and Supplier, since it is possible that could create an unfair relationship between Mr and Mrs L and the Lender if not properly disclosed to them. However, I am not persuaded it did. 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 L, nor have I seen anything that persuades me that the commission arrangement between them gave the Supplier a choice over the interest rate that led Mr and Mrs L into a credit agreement that cost disproportionately more than it 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 time of sale insofar as it was relevant to disclosing the commission arrangements between them. But regulatory breaches do not automatically create unfairness. In this case, even if the Lender and the Supplier failed to follow the relevant regulatory guidance at the time of sale, I don’t think that is a reason to find the credit relationship was unfair. The amount of commission paid by the Lender to the Supplier for arranging the Credit Agreement that Mr and Mrs L entered into wasn’t high. At £1,127.37, it was only 10% of the amount borrowed and even less than that (5%) as a proportion of the charge for credit. So, had Mr and Mrs L known at the time of sale that the Supplier was going to be paid a flat rate of commission at that level, I’m not persuaded that they either wouldn’t have understood that or would have otherwise questioned the size of the payment. After all, Mr and Mrs L wanted Fractional Club membership and had no obvious means of their own to pay for it. And at

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such a low level, the impact of commission on the cost of the credit they needed for a timeshare they wanted doesn’t strike me as disproportionate. So, I think they would still have taken out the loan to fund their purchase at the time of sale had the amount of commission been disclosed. What’s more, 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 to put to one side its commercial interests in pursuit of that goal when arranging the Credit Agreement. And as it wasn’t acting as an agent of Mr and Mrs L but as the supplier of contractual rights that they obtained under the Purchase Agreement, the transaction doesn’t strike me as one with features that suggest the Supplier had an obligation of ‘loyalty’ to them (a fiduciary duty) when arranging the Credit Agreement. Therefore, I’m not persuaded that the commission arrangements between the Supplier and the Lender were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to Mr and Mrs L. Unfair relationship: Conclusion I’m not persuaded that the credit relationship between Mr and Mrs L and the Lender under the Credit Agreement and related Purchase Agreement was unfair to them. So, 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 found that Mr and Mrs L credit relationship with the Lender wasn’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 L’s complaint about an unfair credit relationship. So, for completeness, I’ve considered those grounds as well. 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 a payment of commission from the Lender without telling Mr and Mrs L (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 L a fiduciary duty. So, the remedies that might be available at law in relation to the payment of secret commission aren’t available to them. And while it’s possible that the Lender failed to follow the regulatory guidance in place at the time 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 a reason to uphold this complaint because, for the reasons set out above, I think they would still have taken out the loan to fund their purchase had there been more adequate disclosure of the commission arrangements. END OF COPY OF PROVISIONAL FINDINGS Mr and Mrs L’s response to my provisional decision. 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

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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. I appreciate that Mr and Mrs L are aware of other complaints about similar timeshares being upheld. But I must make this decision based on what in my opinion is fair and reasonable in the circumstances of this complaint. And small differences between seemingly similar complaints can lead to different outcomes. It is by no means the case that all complaints about fractional timeshares have been upheld. Holiday availability Mr and Mrs L say they did make attempts to book holidays up to two years in advance but were only offered a place on a waiting list for the resorts they wanted to visit. When they went on the waiting list, they did not get the booking in the end. So, they did not see the point of going on a waiting list again. I understand their frustration, but it does not change the fact that Fractional Club membership offered the opportunity to take holidays at the Supplier’s resorts. And there was no guarantee that the resorts they wanted would be available at the times they wanted them at the point they tried to make a reservation. Reservations were made on a first come first served basis, and I am not persuaded that Mr and Mrs L were made specific promises about being able to take specific holidays at specific times. The Supplier has confirmed that the holiday planner was completed using live availability, so the holidays shown were available at the Time of Sale. But they could only be booked by members, so Mr and Mrs L would’ve had to book those holidays after completing their Fractional Club purchases if they had wanted those specific holidays at those specific times (assuming they were still available at that point). But they did not attempt to make any bookings until some time later. Affordability of the loan Mr and Mrs L say they informed the Supplier (and therefore the Lender) of their plan to move house, and the expectation that their outgoings would increase. But I have found no evidence to corroborate that. And at the Time of Sale Mr and Mrs L did not know what their new mortgage repayments would be – given they had not yet put their house up for sale, let alone made an offer on a property or applied for a mortgage. The Supplier says it has no record of being informed about a house move until 23 November 2012, when Mr and Mrs L enquired about setting up an instalment plan for their management fees, and mentioned they were in the middle of moving. The Supplier’s note of that call is as follows: Mr and Mrs L refer to a “statement of expenditure” that they recall being completed at the Time of Sale but that was kept by the Supplier. I have queried this with the Lender, and the Supplier has confirmed that no such document was part of its sales process. It says the information obtained about Mr and Mrs L’s financial situation (by the Supplier, the Lender obtained further information from credit reference agencies) is shown on the credit application which they signed. That showed Mr and Mrs L’s joint income was £3,200 per month and that their mortgage repayment was £414 per month. I have dealt with dozens of timeshare complaints involving the Supplier and have never seen a “statement of expenditure”.

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Mr and Mrs L have referred to the Pricing Sheet completed at the Time of Sale. They point to this as being evidence that the £120 per month for ten months was to help with loan repayments, since it shows two amounts for the monthly loan repayments - £172 per month (the actual loan repayment was £172.40 per month) and £52 per month noted as June 2013. While I accept it is possible that the Supplier’s representative may have discussed this payment as having the effect of reducing the cost of the loan in the short term, I am still not persuaded that this was because the loan was otherwise unaffordable for Mr and Mrs L. When Mr and Mrs L contacted the Lender in October 2013, they told the Lender that they were having problems meeting their repayments due to increased mortgage and childcare costs. They did not at that time raise any of the issues mentioned above, as might be expected if that is what happened at the Time of Sale. And that was not part of the complaint they made in 2013. 6 Mr and Mrs L maintain that the reason for the bonus holiday in 2013 was to discuss how the Supplier could help with the loan repayments going forward. But I am still not persuaded by that. The Supplier often offered a bonus holiday as an incentive to purchase membership, since it provided an opportunity to discuss the customer potentially upgrading their membership (by making a further purchase). I am not aware of the Supplier ever helping refinance a loan unless that was done as part of a further purchase. Overall, I remain of the opinion that the Lender had no reason to foresee at the Time of Sale that Mr and Mrs L would not be able to afford the loan repayments. Pressure Mr and Mrs L say they were not informed of the 14-day cooling off period and were not given the contractual documents to take away. But I can see that they signed a page of the Purchase Agreement to specifically acknowledge the 14-day cooling off period, which was referred to as a “Right of withdrawal” in that document. So, I do not accept that they were prevented from cancelling their purchase because they were not informed of that right. The Supplier denies that Mr and Mrs L or any customer would be allowed to leave the sales presentation without the contractual documents including the credit agreement. In any case, there is nothing to suggest that Mr and Mrs L would’ve cancelled within the 14 days regardless of whether or not they had all the contractual documents to look at. As they have said, they had agreed to use the bonus week the following year, and it seems they had no reason to regret their purchase until sometime after the 14 days had expired. 6 The Lender’s note dated 26 October 2013. 2 The Lender’s note dated 12 April 2014, which I referred to in my provisional decision:

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As I said in my provisional decision, in my opinion there is insufficient evidence to demonstrate that Mr and Mrs L made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. Was Fractional Club membership purchased as an investment? Mr and Mrs L maintain that one of the reasons7 they purchased Fractional Club membership was that they held out the hope or expectation of making a financial gain or profit (that is, it was an investment as defined above). They say that when they were reluctant to go through with the purchase, they were told it was an investment for their children’s future holidays and after 19 years they should make a profit. Mr and Mrs L go on to say they didn’t mention this during their initial complaint because at that stage they were more concerned that they were promised holiday availability and just wanted to be able to use Fractional Club membership as they were told they could. Mr and Mrs L also say that they surrendered their membership due to having to pay management fees when they could not even use it for holidays and they had also been told that the Allocated Property may never be sold because all fractional owners (including the Supplier) would have to agree to the sale8. While I have taken on board what Mr and Mrs L have said about this, I am not persuaded to depart from the findings in my provisional decision. Mr and Mrs L began complaining about their Fractional Club membership shortly after purchasing it but did not mention this motivation for their purchase until many years later. Had this been a material factor their decision to enter the Purchase Agreement it is difficult to understand why they did not mention this sooner. So, ultimately, for the above reasons, along with those I already explained in my provisional decision, I remain unpersuaded that any breach of Regulation 14(3) was material to Mr and Mrs L’s purchasing decision. And for that reason, I do not think the credit relationship between Mr and Mrs L and the Lender was unfair to them even if the Supplier had breached Regulation 14(3) of the Timeshare Regulations. My final decision For the reasons I’ve explained, I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr L and Mrs L to accept or reject my decision before 14 April 2026. Phillip Lai-Fang Ombudsman 7 Alongside “holidays each year to our chosen destinations, ownership of a shared property, their help with financing for the first year and then helping us again secure ongoing finance to keep the monthly costs down the following year, we signed just to stop the merry go round and be back with our children…” 8 This is an inaccurate description of the sales process, which cannot be blocked by any one fractional owner. Rather, to postpone the sale beyond two years all fractional owners would have to unanimously agree to this.

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