Shawbrook Bank Limited · DRN-6235128

The complaint Mr C and the estate of Mrs C’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with them under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying a claim under Section 75 of the CCA. For ease of reading, I will refer only to Mr C for most of this decision. What happened Mr C 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 his membership of a timeshare that I’ll call the ‘Fractional Club’ – which he bought on 10 November 2014 (the ‘Time of Sale’). He entered into an agreement with the Supplier to buy 4,700 fractional points at a cost of £63,600 (the ‘Purchase Agreement’) but after trading in an existing timeshare, he paid £12,780. Fractional Club membership was asset backed – which meant it gave Mr C 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 his membership term ends. Mr C paid for his Fractional Club membership by taking finance of £12,780 from the Lender (the ‘Credit Agreement’). Mr C – using a professional representative (the ‘PR’) – wrote to the Lender on 13 February 2024 (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 the 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 Lender dealt with Mr C’s concerns as a complaint and issued its final response letter on 26 March 2024, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service. I issued a provisional decision in February 2026 setting out why I didn’t plan to uphold it. I said: “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, 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. Mr C’s complaint about the Lender’s handling of his Section 75 Claim

-- 1 of 8 --

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 Mr C’s Section 75 claim for misrepresentation was time-barred under the LA before he put it to the Lender. A claim under Section 75 is a “like” claim against the creditor. It essentially mirrors the claim Mr C could make against the Supplier. 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 Mr C entered into the purchase of his timeshare at that time based on the alleged misrepresentations of the Supplier – which he said were relied upon. And as the loan from the Lender was used to help finance the purchase, it was when he entered into the Credit Agreement that he suffered a loss. Mr C first notified the Lender of his Section 75 claim on 13 February 2024. 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 to reject Mr C’s concerns about the Supplier’s alleged misrepresentations. I note also that the purchase price on the Supplier’s ‘pricing summary’ document is £63,600. Section 75 does not apply to claims relating to single items with a cash price of more than £30,000. So even if Mr C’s claim had been made within time, I still don’t think it would have been unreasonable for the Lender to decline to meet it. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? 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 Mr C 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;

-- 2 of 8 --

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 Mr C and the Lender. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations the main reason, why the PR now says the credit relationship with the Lender was unfair to them is the suggestion that Fractional Club membership was marketed and sold to Mr C as an investment in breach of prohibition against selling timeshares in that way. The Lender does not dispute, and I am satisfied, that Mr C’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 and Mr C say that the Supplier did exactly that at the Time 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. A share in the Allocated Property clearly constituted an investment as it offered Mr C the prospect of a financial return – whether or not, like all investments, that was more than what he 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 Mr C 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 him as an investment, i.e. told him or led him to believe that Fractional Club membership offered him the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. 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).

-- 3 of 8 --

There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Time of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations. On the one hand, it is clear that the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Mr C, 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. On the other hand, I acknowledge that the Supplier’s sales process left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s equally possible that Fractional Club membership was marketed and sold to Mr C 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. Would the credit relationship between the Lender and Mr C have been rendered unfair to him had there been a breach of Regulation 14(3) of the Timeshare Regulations? 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 Mr C 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 Mr C and the Lender that was unfair to him and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led him 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 Mr C decided to go ahead with his purchase. Mr C’s brief written testimony (in its entirety) said: l, set out my recollection of the events at the (Supplier) seminar which resulted in my late wife and l buying a Fractional in November 2014. We both retired in 2012. Every time we went on holiday to a (Supplier) Resort, we were always asked to attend a (Supplier) seminar at the back end of our holidays. initially, the (Supplier’s) sales representatives wanted us to move from Points timeshare to a new product called a Fractional which had the benefits of lower management fees and better resort accommodation as well as getting all our money back when the apartment was sold at a future date. The (Supplier) sales representative managed to arrange Ioan with Hitachi to purchase the Fractional.

-- 4 of 8 --

While Mr C talks about getting all his money back, there is very little detail as to what the Supplier said that made him think he could achieve a profit or financial gain from Fractional Club membership, or about how this was a motivating factor for his purchase. The PR provided notes of a telephone call it said it had with Mr C in November 2023. Within these notes it is recorded Mr C had said that purchasing Fractional Club membership was “a way of getting back all the money we have paid so far to (the Supplier) when apartment was sold at a future date”. Including his previous timeshares ‘all of the money’ Mr C had to paid to the Supplier at that point in time looks to have been at least around £72,000. Mr C’s testimony lacks a plausible explanation as to how he was told his share in the Allocated Property would have generated that kind of return when it was sold. On balance, I’m not persuaded this is something the Supplier is likely to have told him in this case. I note also that Mr C increased the number of weeks in which he could take holidays by an extra week, having already held a significant number of weeks. And it looks like Mr C made frequent use of holiday weeks after this purchase. So, I think his purchase is most likely to have been motivated by the prospect of being able to take more holidays. That doesn’t mean Mr C 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 Mr C doesn’t persuade me that his purchase was motivated by his 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 he 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 C’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. And for that reason, I do not think the credit relationship between Mr C and the Lender was unfair to them even if the Supplier had breached Regulation 14(3). Other points Mr C’s complaint that the credit broker was not authorised The PR has argued that that the Credit Agreement was arranged by an unauthorised credit broker, the upshot of which is to suggest that the Lender wasn’t permitted to enforce the Credit Agreement. However, it looks to me like Mr C knew, amongst other things, how much he was borrowing and repaying each month, who he was borrowing from and that he was borrowing money to pay for Fractional Club membership. So, even if the Credit Agreement was arranged by a broker that didn’t have the necessary permission to do so (which I make no formal finding on), I can’t see why that led to a financial loss for Mr C. And with that being the case, I’m not persuaded that it would be fair or reasonable to tell the Lender to compensate him, even if the loan wasn’t arranged properly. Mr C’s complaint that the right checks weren’t carried out before the Lender lent to him 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 Mr C was actually unaffordable before also concluding that he lost out as a result and then consider whether the credit relationship with

-- 5 of 8 --

the Lender was unfair to him for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr C. Overall Conclusion In conclusion, given the facts and circumstances of this complaint, I am not persuaded that the Lender was party to a credit relationship with Mr C under the Credit Agreement and related Purchase Agreement that was unfair to him for the purposes of Section 140A of the CCA. I do not think that the Lender acted unfairly or unreasonably when it dealt with Mr C’s Section 75 claim. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate him.” The PR did not agree with my provisional decision and provided further comments and evidence for consideration. The Lender said it had nothing further to add. The complaint has therefore been returned to me for a final decision. The legal and regulatory context In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is, in many ways. no different to that shared in several hundred published ombudsman decisions on very similar complaints – which can be found on the Financial Ombudsman Service’s website. And with that being the case, it is not necessary to set out that context in detail here. But I would add that the following regulatory rules/guidance are also relevant: The Consumer Credit Sourcebook (‘CONC’) – Found in the Financial Conduct Authority’s (the ‘FCA’) Handbook of Rules and Guidance Below are the most relevant provisions and/or guidance as they were at the relevant time. • CONC 3.7.3 [R] • CONC 4.5.3 [R] • CONC 4.5.2 [G] The FCA’s Principles The rules on consumer credit sit alongside the wider obligations of firms, such as the Principles for Businesses (‘PRIN’). Set out below are those that are most relevant to this complaint: • Principle 6 • Principle 7 • Principle 8 • What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and

-- 6 of 8 --

reasonable in the circumstances of this complaint. Following the responses from both parties, I’ve considered the case afresh and having done so, I’ve reached the same decision as that which I outlined in my provisional findings, for broadly the same reasons. Again, my role as an Ombudsman isn’t to address every single point which has been made to date, but to decide what is fair and reasonable in the circumstances of this complaint. If I haven’t commented on, or referred to, something that either party has said, this doesn’t mean I haven’t considered it. Rather, I’ve focused here on addressing what I consider to be the key issues in deciding this complaint and explaining the reasons for reaching my final decision. The PR’s further comments in response to my provisional decision in the main relate to the issue of whether the credit relationship between Mr C and the estate of Mrs C and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Mr C as an investment at the Time of Sale. As outlined in my provisional decision, the PR originally raised various other points of complaint, all of which I addressed at that time. But they didn’t make any further comments in relation to those in their response to my provisional decision. Indeed, they haven’t said they disagree with any of my provisional conclusions in relation to those other points. And since I haven’t been provided with anything more in relation to those other points by either party, I see no reason to change my conclusions in relation to them as set out in my provisional decision. So, I’ll focus here on the PR’s points raised in response. The PR has provided its further thoughts as to Mr C’s likely motivations for purchasing Fractional Club membership. I recognise it has interpreted Mr C’s testimony differently to how I have and thinks it points to him having been motivated by the prospect of a financial gain from Fractional Club membership. In my provisional decision I explained the reasons why I didn’t think Mr C’s purchase was motivated by the prospect of a financial gain (i.e., a profit). And although I have carefully considered the PR’s arguments in response to this and accept this is a finely balanced complaint, I’m not persuaded the conclusion I reached on this point was unfair or unreasonable. The PR said that Mr C’s purchase only makes sense in the context of a perceived financial advantage at the end of the membership term as he’d made decades of holiday only timeshare purchases. I do recognise that Mr C already held a fairly significant number of fractional points with the Supplier before he made this purchase having previously upgraded from a non-fractional product to a fractional one some two years earlier. However, Mr C increased the number of weeks he could take from 6 to 7 with this particular purchase. And he continued to make purchases after this one, upgrading not just the volume of holidays he could take (as he did at the Time of Sale) but also the standard of accommodation he could book. Mr C’s reservation history shows he took regular holidays after this purchase too. So, I still think the evidence shows that holiday entitlement was likely an important factor in the decision Mr C made to purchase. I don’t think the conclusion the PR has invited me to reach insofar as Mr C’s purchase only makes sense in the context of a perceived financial advantage at the end of the membership term is one that can be made from Mr C’s purchase history alone.

-- 7 of 8 --

This is why it is important to consider Mr C’s testimony in this specific case to get a better idea of why he made his purchase. However, the written testimony Mr C has provided while referencing the Time of Sale does not appear to relate to that particular sale and he appears to be referencing the first fractional timeshare he bought in 2012. For example, he talks about the Supplier wanting him to move “from points to a new product called fractional”. So, I don’t find his written statement to be persuasive evidence of his recollections of the Time of Sale or of his motivations behind his purchase of Fractional Club membership at the Time of Sale. The PR’s reference to its call notes effectively suggest that Mr C relies on a general statement that he was told the same thing (i.e. he would get back all of the money from his previous purchases plus the one in question) every time he made a purchase. However, Mr C bought different products over several years and the context of each sale was likely to have been different. For example, on some occasions he didn’t trade in all of his existing fractional points so it seems unlikely he would have been told he could get all of his money back from all of his previous purchases on those occasions. So, there are doubts in my mind as to the applicability of the PR’s notes to the Time of Sale and I don’t find such a generalised recollection of events to carry much weight in respect of this particular purchase. When I said Mr C’s testimony lacked detail in my provisional decision, that is why in this particular case, it is problematic for him. 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 C’s purchasing decision. And for that reason, I do not think the credit relationship between Mr C and the estate of Mrs C and the Lender was unfair to them even if the Supplier had breached Regulation 14(3). Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that the Lender acted unfairly or unreasonably when it dealt with Mr C and the estate of Mrs C’s Section 75 claim, and I am not persuaded that the Lender was party to a credit relationship with them under the Credit Agreement that was unfair to them for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate them. My final decision For the reasons I’ve explained, I do not uphold Mr C and the estate of Mrs C’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C and the estate of Mrs C to accept or reject my decision before 15 April 2026. Michael Ball Ombudsman

-- 8 of 8 --