Clydesdale Financial Services Limited · DRN-4979133

The complaint 1. Mr D says that Clydesdale Financial Services Limited, trading as Barclays Partner Finance (“BPF”), did not act fairly or reasonably when considering its obligations under the Consumer Credit Act 1974 (“CCA”) in relation to a loan taken to pay for a timeshare. What happened 2. In June 2013 (“the Time of Sale”), Mr D, alongside another, took out a timeshare membership from a timeshare supplier (“the Supplier”).1 This was membership of the Fractional Property Owners Club (“FPOC Membership”). FPOC Membership provided Mr D with a number of ‘points’ every year that he could spend to stay at properties provided by the Supplier. But this was also ‘asset backed’, so that his membership was linked to a specified property (“the Property”). Mr D had no preferential right to stay at the Property, but after nineteen years, the Property would be placed for sale and the proceeds of sale would be divided amongst the people whose memberships were linked to the Property. FPOC Membership cost £18,638 and it was paid for by Mr D by trading in an existing membership he had with the Supplier and using a fifteen-year loan from BPF for the remainder. 3. In July 2017, Mr D complained to BPF using the assistance of a professional representative (“PR”). The complaint was set out at length in a thirteen-page letter (“the Letter of Claim”). In summary it was said: • BPF was liable to pay Mr D compensation in relation to the sale of the FPOC Membership due to the operation of ss.75 and 140A CCA. • In particular, it was alleged that BPF was jointly liable for the Supplier’s misrepresentations made at the Time of Sale. It was argued that BPF ought to have accepted, and paid, Mr D’s claim under s.75 CCA. Further, it was said that BPF was a party to an unfair debtor-creditor relationship due to failings in the way FPOC Membership was sold and operated. • PR explained that Mr D had taken out a trial membership from the Supplier in November 2010, which entitled him to take a number of holidays in a three-year period. But, as he had not been able to take holidays due to work commitments, this was going to expire unused, so he agreed to trade it in for FPOC Membership to get some value out of the trial membership. • PR described a sales presentation where Mr D was provided with luxurious accommodation and shown brochures with resorts all over the world. PR said Mr D was enticed by the idea of having “wonderful holidays in the sun”. Further, FPOC Membership was presented as suitable for him as it placed a defined time limit on the membership term. • PR alleged that Mr D went through a pressured and intense sales process, during which he felt he had no opportunity to leave the presentation. The sale lasted all day and Mr D was led to believe he had to sign up for FPOC Membership on the day. • PR said that FPOC Membership was “extremely attractive to our clients, because the 1 Although the timeshare was in the names of Mr D and another, as the loan agreement was in Mr D’s name alone, only he is able to bring this complaint. So I have referred to him throughout.

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membership was sold to our clients on the basis that the Scheme had a fixed duration of 19 years from 2013, thus coming to an end in 2032. It was sold on the basis that there was a specified end date of 2032, beyond which they would have no further liability in respect of management charges after that date”. As a result of that, the pressured sale and the risk of losing the benefit of the trial membership, Mr D agreed to take out FPOC Membership. • PR also set out a number of statements it said Mr D relied on when taking out FPOC Membership. In particular that FPOC Membership had a guaranteed end date after nineteen years, that FPOC Membership meant Mr D was buying an interest in real property and that it was an investment. The things said were not true and amounted to misrepresentations by the Supplier. In particular, there was no guaranteed end date of FPOC Membership, the sale of the Property could be postponed and Mr D never gained an interest in real property. • PR argued that the terms of FPOC Membership and the way in which it was sold breached The Unfair Terms in Consumer Contracts Regulations 1999 ("the UTCCR") and The Consumer Protection from Unfair Trading Regulations 2008 ("the CPUTR"), both of these leading to an unfair debtor-creditor relationship. 4. BPF responded in August 2017. It did not accept any of Mr D’s complaint and said that if he disagreed, he could refer his complaint to our service. In particular, it disagreed that the sale process was pressured and felt that Mr D had enough time to consider FPOC Membership before agreeing to take it out and, in any event, he had a fourteen-day cooling off period in which it could be cancelled. BPF also said that the Property would be placed for sale at the agreed time and it needed a unanimous agreement of all FPOC Members, whose memberships were associated with that Property, to agree to suspend the sale, so what PR alleged was incorrect. It also said that Mr D was not told he was buying a specific parcel of real property or that the sales staff purported to be investment advisors. 5. Unhappy with BPF’s response, PR referred a complaint to our service on Mr D’s behalf in November 2017. When doing so, it sent a fourteen-page letter to our then Chief Ombudsman, setting out in general terms problems PR said there were with timeshares sold by the Supplier.2 PR said it had seen a pattern in the sales of memberships like Mr D’s, in that the Supplier presented FPOC Membership as the purchase of an interest in real property, as an opportunity to make a profit or return on what was paid for membership, and as a solution to perpetual memberships as it had a defined end date to membership. 6. In October 2023, PR wrote to our service and explained that Mr D had not provided any direct evidence in the form of a witness statement, but the Letter of Claim was based on what Mr D had said happened and was approved by him. So PR asked our service to take that letter as his evidence. It also asked us to consider, amongst other things, the Supplier’s sales history, potential breaches of The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (“the Timeshare Regulations”) and the judgment in R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd; R. (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v. Financial Ombudsman Service [2023] EWHC 1069 (Admin) (“Shawbrook & BPF v. FOS’”). 7. One of our investigators considered the complaint, but did not think BPF needed to do anything further. He concluded that there was not enough to say Mr D was subjected to 2 This letter is generic to all complaints made by PR in respect of the Supplier’s sales, so I have not set out the contents of the letter in detail. However, I have read it and, in so far as it relates to Mr D’s sale, have taken it into account.

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undue pressure to take out FPOC Membership and that, on balance, he did not think there was an unfair debtor-creditor relationship. He also said there was not enough to show there was an actionable misrepresentation. 8. PR disagreed and asked for an ombudsman to review to the complaint. In doing so, it reiterated what was said in the Letter of Claim. PR also said the available evidence demonstrating the Supplier’s sales practices had been considered in other ombudsmen’s decisions and it asked that evidence to be taken into account. PR also provided a statement from Mr D, setting out in more detail his memories of the sale. 9. As the parties did not agree with our investigator’s view, the complaint was passed to me for a decision. Having considered everything, I issued a provisional decision (“PD”), setting out what I thought was a fair and reasonable outcome in the circumstances of this complaint. I did not think BPF needed to do anything further to settle Mr D’s complaint and so I did not uphold it. 10. BPF responded to say it had nothing further to add. 11. PR, on Mr D’s behalf, provided a twenty-six page response disagreeing with my PD. Given the length of the response, I will not set it out in detail, but for the avoidance of doubt I have read and considered everything that was said. In summary, PR said: • I had failed to properly consider the Shawbrook & BPF v. FOS judgment and other decisions issued by ombudsmen at our service. • I was wrong in law to say that a breach of Reg.14(3) did not give rise to an unfair debtor-creditor relationship. • I failed to consider the wider circumstances surrounding Mr D’s sale, in particular that it was likely that the Supplier used the prospect of a financial return as way to sell FPOC Membership. • The Supplier was not properly authorised to sell investments and therefore the loan agreement with BPF was unenforceable and this gave rise to an unfair debtor- creditor relationship. This was a new argument, not raised before with BPF. 12. I also shared with PR sets of slides, provided by the Supplier, that had been used when selling timeshare memberships similar to Mr D’s over a number of years and I invited PR to provide submissions on this material. 13. PR responded with substantial commentary on the slides, arguing that they demonstrated that the Supplier sold FPOC Membership to Mr D as an investment and that this led to an unfair debtor-creditor relationship. 14. As my PD was not agreed by the parties, I have reconsidered the complaint before issuing a final decision. So I have set out below what I provisionally decided, PR’s responses and my final decision on this complaint. What I have 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. 15. When deciding complaints, I am required by DISP 3.6.4 R of the Financial Conduct Authority’s (“FCA”) Handbook to take into account: “(1) relevant:

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(a) law and regulations; (b) regulators’ rules, guidance and standards; (c) codes of practice; and (2) (where appropriate) what [the ombudsman] considers to have been good industry practice at the relevant time.” 16. Where I need to make a finding of fact based on the evidence, I make my decision on the balance of probabilities. In other words, when I make a finding that something happened, that is because I think it is more likely than not that that thing did happen. 17. In response to my PD, PR provided substantial submissions. I have not dealt with every matter raised, rather I have focused on what I consider material to reach a fair and reasonable decision on 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. The evidence in this compliant 18. I will start by setting out the evidence I have been provided by both of the parties. Mr D’s evidence 19. In PR’s Letter of Claim to the Supplier it set out some specific words that Mr D alleged were said to him. Those words were: "There is a guaranteed end date to the scheme" "After the 19 year limit it would be sold" "The property will be sold and you will get something back, based on current market value" "This is a good investment" "Ownership of a share in property" 20. As noted above, PR said that Mr D approved this letter, so it said this should be treated as his evidence of the sale. 21. PR also provided a two-page document titled “Barclays Partner Finance Letter dated 10 August 2017” that appeared to be Mr D’s observations on BPF’s initial response to the complaint. In my PD I said that I could not see that Mr D had added anything further to his recollections of the relevant parts of the sale. 22. Mr D also provided a statement signed in November 2023, which said it was drafted in response to our investigator’s view. Parts of that statement read as follows: “3. When my late wife and I purchased [FPOC Membership], we were told that [the Supplier] had a new scheme, called Fractional Property Ownership, which should be attractive to older people, such as us, because it had a short term for their membership 4. We were told that the fractional product involved buying shares in a property, in Tenerife, which would be sold, at the end of the term, and the proceeds of sale split between all the fractional owners.

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5. The presentation was a very intense process, lasting well into the early evening. We were seated on a large room with many other clients, which was uncomfortable, due to the noise level and poor air conditioning. 6. We were attended by a continual succession of sales representative talking about the various benefits of Fractional Property Ownership and also offering additional bonuses and incentives to attract out attention. We were told on several occasions that we had to accept that day, as otherwise the offer would no longer be available. 7. By the end, we felt that had no possibility of leaving the room, which we felt uncomfortable with. During the process, I was offered, and accepted, several glasses of wine. 8. There was no clear programme as to how and when the meeting would conclude, and we felt trapped to the extent that we found it difficult to leave. Fractional Property Ownership was a new concept to both of us and involved a complex points system. Because of the pressure we were put under, by successive sale representatives and the uncomfortable environment we were put in, we were never afforded sufficient opportunity to properly evaluate the concept. Throughout the whole process we felt under pressure to accept. 9. We had no reason to disbelieve what we were told, so after several hours, we agreed to go ahead with the purchase. 10. We did so on the basis that not only would it give us luxury holidays for 19 years, but it would also be a good investment, as it would secure us a return when the property was sold.” The FPOC Membership sale documents 23. A number of documents were provided from the time of sale. Those included: • Mr D’s FPOC Membership purchase agreement and associated terms and conditions • Mr D’s signed FPOC Membership information sheet • Mr D’s signed Member’s declaration PR’s post-provisional decision submissions 24. In my PD, I set out the legal framework, however given the substantial submissions I have received, I think it is helpful to set out the relevant law in more detail. 25. Mr D said that BPF was liable to pay compensation due to the operation of the CCA. Specifically it was said that BPF was party to an unfair debtor-creditor relationship, as defined by s.140A CCA, caused by the sale of the FPOC Membership and that BPF was jointly liable for the Supplier’s misrepresentations under s.75 CCA. I explained that as those provisions are relevant law, I have to think about them when coming to what I think is a fair and reasonable outcome to this complaint (DISP 3.6.4 R). 26. The CCA introduced a regime of connected lender liability under s.75 CCA that affords consumers (“debtors”) a right of recourse against lenders that provide the finance for the acquisition of goods or services from third-party merchants (“suppliers”) in the event that there is an actionable misrepresentation and/or breach of contract by the supplier.

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27. In short, a claim against BPF under s.75 CCA essentially mirrors the claim Mr D could make against the Supplier. 28. Certain conditions must be met if the protection afforded to consumers is engaged, including, for instance, the cash price of the purchase and the nature of the arrangements between the parties involved in the transaction. BPF did not dispute that the relevant conditions were met in this complaint. As I was satisfied that s.75 CCA applied, if I found that the Supplier was liable for having misrepresented something to Mr D at the Time of Sale, BPF was also liable and had a duty to pay the appropriate compensation. 29. PR did not comment on the assessment in my PD of Mr D’s s.75 CCA claim and confined its comments to whether there was an unfair debtor-creditor relationship between Mr D and BPF as defined by s.140A CCA, so I will not comment further on the law surrounding s.75 CCA. 30. Under s.140A CCA, a debtor-creditor relationship can be found to have been or be unfair to the debtor because of one or more of the following: the terms of the credit agreement itself; how the creditor exercised or enforced its rights under the agreement; and any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement) (s.140A(1) CCA). Such a finding may also be based on the terms of any related agreement (which here, includes the FPOC Membership agreement) and, when combined with s.56 CCA, on anything done or not done by the supplier on the creditor’s behalf before the making of the credit agreement or any related agreement. 31. S.56 CCA plays an important role in the CCA because it defines the terms “antecedent negotiations” and “negotiator”. As a result, it provides a foundation for a number of provisions that follow it. But it also creates a statutory agency in particular circumstances. And while s.56(1) sets out three of them, the most relevant to this complaint are negotiations conducted by the supplier in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement. 32. A debtor-creditor-supplier agreement is defined by s.12(b) CCA as “a restricted-use credit agreement which falls within section 11(1)(b) and is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier […]”. And s.11(1)(b) CCA says that a restricted-use credit agreement is a regulated credit agreement used to “finance a transaction between the debtor and a person (the ‘supplier’) other than the creditor […] and “restricted-use credit” shall be construed accordingly.” 33. BPF does not dispute that there was a pre-existing arrangement between it and the Supplier. So, the negotiations conducted by the Supplier during the sale of Mr D’s FPOC Membership were conducted in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement as defined by s.12(b). That made them antecedent negotiations under s.56(1)(c) – which, in turn, meant that they were conducted by the Supplier as an agent for BPF as per s.56(2). And such antecedent negotiations were “any other thing done (or not done) by, or on behalf of, the creditor” under s.140(1)(c) CCA. 34. Antecedent negotiations under s.56 CCA cover both the acts and omissions of the Supplier, as Lord Sumption made clear in Plevin v. Paragon Personal Finance Limited [2014] UKSC 61 (“Plevin”) at para 31:

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“[Section] 56 provides that [when] antecedent negotiations for a debtor-creditor- supplier agreement are conducted by a credit-broker or the supplier, the negotiations are “deemed to be conducted by the negotiator in the capacity of agent of the creditor as well as in his actual capacity”. The result is that the debtor’s statutory rights of withdrawal from prospective agreements, cancellation and rescission may arise on account of the conduct of the negotiator whether or not he was the creditor’s agent.’ […] Sections 56 and 140A(3) provide for a deemed agency, even in a case where there is no actual one. […] These provisions are there because without them the creditor’s responsibility would be engaged only by its own acts or omissions or those of its agents.” 35. This was recognised by Mrs Justice Collins Rice in Shawbrook & BPF v. FOS at para 135: “By virtue of the deemed agency provision of s.56, therefore, acts or omissions ‘by or on behalf of’ the bank within s.140A(1)(c) may include acts or omissions of the timeshare company in ‘antecedent negotiations’ with the consumer”. 36. In the case of Scotland & Reast v. British Credit Trust [2014] EWCA Civ 790 (“Scotland & Reast”), the Court of Appeal said, at para 56, that the effect of s.56(2) CCA meant that “negotiations are deemed to have been conducted by the negotiator as agent for the creditor, and that is so irrespective of what the position would have been at common law”, before going on to say the following at para 74: “[...] there is nothing in the wording of s.56(2) to suggest any legislative intent to limit its application so as to exclude s.140A. Moreover, the words in s.140A(1)(c) "any other thing done (or not done) by, or on behalf of, the creditor" are entirely apposite to include antecedent negotiations falling within the scope of s.56(1)(c) and which are deemed by s.56(2) to have been conducted by the supplier as agent of the creditor. Indeed the purpose of s.56(2) is to render the creditor responsible for such statements made by the negotiator and so it seems to me wholly consistent with the scheme of the Act that, where appropriate, they should be taken into account in assessing whether the relationship between the creditor and the debtor is unfair.”3 37. So, the Supplier is deemed to be BPF’s statutory agent for the purposes of the pre- contractual negotiations. 38. Furthermore, the scope of that responsibility extends to both acts and omissions by the Supplier as the Supreme Court in Plevin made clear when it referred to ‘acts or omissions’ when discussing s.56. And, as s.56(3)(b) says that an applicable agreement cannot try to relieve a person from liability for ‘acts or omissions’ of any person acting as, or on behalf of, a negotiator, it must follow that the reference to ‘omissions’ would only be necessary because they can be attributed to the creditor under s.56. 39. However, an assessment of unfairness under s.140A is not limited to what happened immediately before or at the time a credit agreement and related agreement were entered into. The High Court held in Patel v. Patel [2009] EWHC 3264 (QB) (“Patel”)4, that determining whether or not the relationship complained of was unfair had to be made “having regard to the entirety of the relationship and all potentially relevant matters up to the time of making the determination”, which was the date of the trial in the case of an existing credit relationship or, otherwise, the date the credit relationship ended. 3 The Court of Appeal’s decision was recently followed in Smith v. The Royal Bank of Scotland plc [2023] UKSC 34 (“Smith”). 4 This was also recently approved by the Supreme Court in Smith.

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40. The breadth of the unfair relationship test under s.140A, therefore, is stark. But it is not a right afforded to a debtor simply because of a breach of a legal or equitable duty. As the Supreme Court said in Plevin at para 17: “Section 140A […] does not impose any obligation and is not concerned with the question whether the creditor or anyone else is in breach of a duty. It is concerned with […] whether the creditor’s relationship with the debtor was unfair.” 41. Instead, it was said by the Supreme Court in Plevin that the protection afforded to debtors by s.140A is the consequence of all of the relevant facts. The impact of this on Mr D’s complaint is discussed more fully below. 42. I explained in my PD that I thought the following judgments, amongst others, helped to set out the approach to take when thinking about unfair debtor-creditor relationships in the context of this complaint: i. Plevin ii. Carney v. NM Rothschild & Sons Ltd [2018] EWHC 958 (“Carney”) iii. Kerrigan v. Elevate Credit International Ltd [2020] EWHC 2169 (Comm) (“Kerrigan”) iv. Shawbrook & BPF v. FOS v. Patel vi. Smith vii. Scotland & Reast 43. Having considered those judgments, I thought the following principles could be drawn: i. the question of whether the relationship between Mr D and BPF is or was unfair is the central issue to determine in this complaint. The standard of commercial conduct is relevant, as is the difference in knowledge and understanding between the parties if sufficiently extreme. ii. the breach of a legal duty, such as the breach of the Timeshare Regulations by a supplier acting on a creditor’s behalf (due to s.56 CCA), is neither necessary for a finding of an unfair debtor-creditor relationship, nor does it automatically lead to such a finding. iii. for a breach of Reg.14(3) of the Timeshare Regulations to lead to an unfair debtor- creditor relationship that requires relief from that unfairness, it is a relevant consideration whether the breach caused the debtor to enter into the timeshare and/or loan agreement. I thought that accorded with common sense: if events would have unfolded in the same way whether or not such a pre-contractual breach had occurred, it may be hard to attribute great importance to the breach when deciding whether an unfair debtor-creditor relationship ensued, or whether a remedy is appropriate. 44. In addition to the CCA, the regulatory requirements of particular importance to this complaint include the Timeshare Regulations, the UTCCR and the CPUTR. 45. As set out in my PD, the sale of timeshares like Mr D’s was regulated by the Timeshare Regulations. The regulation referred to by PR in October 2023 was Reg.14(3), which read: “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.”

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46. The Timeshare Regulations provided a regulatory framework. But they represented a minimum standard. And as the parties to this complaint already know, I am also required to take into account, when appropriate, what I consider to have been good industry practice at the relevant time. In this complaint, that includes the Resort Development Organisation’s Code of Conduct dated 1 January 2010. 47. PR disagreed with what I said about the law in my PD. It said that I failed to follow a separate decision that I had issued previously (referred to in PR’s submissions as ‘the Second Precedent’), which was one of the two decisions that were challenged by way of judicial review in Shawbrook & BPF v. FOS. It also said I failed to properly apply the judgment in Shawbrook & BPF v. FOS. In particular, it was said: “It has, therefore, already been decided by the FOS in the Second Precedent that the sale of the FPOC Membership was a breach of regulation 14(3) of the [Timeshare Regulations].” (page 9 of the submissions) and “It is our opinion that Mrs Justice Collins [sic] has made clear that it is almost an impossibility that the sale of an FPOC Membership would not be caught by regulation 14(3) of the Timeshare Regulations. The investment element, as found by the Second Precedent and [Shawbrook & BPF v. FOS], is intrinsic to the product. Indeed, it is its only defining feature from similar timeshare products. However, the Second Precent and [Shawbrook & BPF v. FOS] found that a breach of regulation 14(3) of the Timeshare Regulations made the relationship between the consumer and the finance provider unfair, pursuant to section 140A CCA 1974” (page 9 of the submissions) 48. Further, PR argued (page 8 of the submissions): “[…]The Ombudsman has failed to take into account the Precedents and [Shawbrook & BPF v. FOS]. Firstly, it has been said that a fractional membership is an investment, as is accepted by the Ombudsman, but it can be “marketed” as not an investment. How is that possible? The answer is that it cannot. Once the “investment” is described as what it is, which is accepted here, it MUST have been “marketed” as an investment, given it is an “investment”. That is the only logical conclusion to reach.” 49. For the avoidance of doubt, a finding in a separate decision that a sale of a timeshare membership breached Reg.14(3) does not mean any ombudsman looking at the sale of a similar product must come to the same finding. Each complaint turns on its own facts: an ombudsman’s decision on how one timeshare sale occurred does not determine his, or another ombudsman’s, decisions about the facts of other sales at different times to different purchasers. So my previous decision that PR has referred to as the Second Precedent is not determinative of the facts of Mr D’s complaint. The Financial Ombudsman Service is not a court, and its decisions do not have precedent value (as certain court judgments do). I must determine Mr D’s complaint on its individual facts

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and make a decision as to what is fair and reasonable in all the circumstances of this case. 50. Further, a finding that a sale has breached Reg.14(3) is not determinative of the issue of whether or not there is an unfair debtor-creditor relationship arising out of that sale. In so far as this is being alleged by PR, I disagree and I will explain why the judgments referred to in my provisional decision do not lead to that conclusion. S.140A CCA – relevant unfair relationship case law 51. The judgment in the case of Plevin provides the leading judgment on unfair debtor- creditor relationships, in which it was held that the level of commission paid in respect of an insurance policy, paid for by a loan, was so high it created an unfair relationship due to the extreme inequality of knowledge and understanding between the creditor and the debtor, Mrs Plevin. In Plevin, the Court held that the standard of commercial conduct was something to consider when determining the fairness of any debtor-creditor relationship, and relevant rules can be evidence of what that standard was. But whether a creditor (or someone acting on their behalf) had broken a rule is not determinative to the question asked by s.140A CCA. Lord Sumption held at para 17: “…Section 140A, by comparison, does not impose any obligation and is not concerned with the question whether the creditor or anyone else is in breach of a duty. It is concerned with the question whether the creditor’s relationship with the debtor was unfair. It may be unfair for a variety of reasons, which do not have to involve a breach of duty...” 52. The Plevin case concerned the duty to disclose certain information under the Financial Services Authority’s (as it was then) rules for financial firms conducting certain business, in particular the Insurance Conduct of Business (“ICOB”) rules. It was further held at para 17: “…The ICOB rules impose a minimum standard of conduct applicable in a wide range of situations, enforceable by action and sounding in damages. Section 140A introduces a broader test of fairness applied to the particular debtor- creditor relationship, which may lead to the transaction being reopened as a matter of judicial discretion. The standard of conduct required of practitioners by the ICOB rules is laid down in advance by the Financial Services Authority (now the Financial Conduct Authority), whereas the standard of fairness in a debtor-creditor relationship is a matter for the court, on which it must make its own assessment. Most of the ICOB rules, including those relating to the disclosure of commission, impose hard- edged requirements, whereas the question of fairness involves a large element of forensic judgment. It follows that the question whether the debtor-creditor relationship is fair cannot be the same as the question whether the creditor has complied with the ICOB rules, and the facts which may be relevant to answer it are manifestly different. An altogether wider range of considerations may be relevant to the fairness of the relationship, most of which would not be relevant to the application of the rules. They include the characteristics of the borrower, her sophistication or vulnerability, the facts which she could reasonably be expected to know or assume, the range of choices available to her, and the degree to which the creditor was or should have been aware of these matters.” (emphasis my own) 53. It is apparent that the question of ‘fairness’ in s.140A CCA is broader than simply considering whether the supplier or the lender (or its agent) has breached a rule or other obligation during the course of relevant dealings. And Lord Sumption went on to explain at para 18:

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“…A sufficiently extreme inequality of knowledge and understanding is a classic source of unfairness in any relationship between a creditor and a non- commercial debtor. It is a question of degree…” 54. Paragraph 10 of the judgment made clear that there will normally be large differences of financial knowledge and expertise between a debtor and a creditor, and this unequal relationship is not necessarily unfair. Rather it was when the inequality of knowledge and understanding was “sufficiently extreme”. 55. Finally, it was held at para 20: “On that footing, I think it clear that the unfairness which arose from the nondisclosure of the amount of the commissions was the responsibility of Paragon [the lender]. Paragon were the only party who must necessarily have known the size of both commissions. They could have disclosed them to Mrs Plevin. Given its significance for her decision, I consider that in the interests of fairness it would have been reasonable to expect them to do so. Had they done so this particular source of unfairness would have been removed because Mrs Plevin would then have been able to make a properly informed judgment about the value of the PPI policy. This is sufficiently demonstrated by her evidence that she would have questioned the commissions if she had known about them, even if the evidence does not establish what decision she would ultimately have made.” 56. Here, the Court found that it was enough that Mrs Plevin would have questioned whether the insurance provided good value for money when considering the question of the fairness of the relationship. It was the non-disclosure that caused the unfairness. The Court made no finding whether Mrs Plevin would have made a different purchasing decision had she known more, but that did not prevent it finding unfairness. 57. So the breach of a legal duty does not automatically mean a credit relationship is unfair. It is necessary to consider the impact of any breach on the debtor – would they have entered into the agreement in any event? 58. I am mindful of the judgment in Carney where HHJ Waksman QC (as he then was) held, in relation to s.140A CCA, at para 51: “Causation is perhaps less straightforward. In cases of wrong advice and misrepresentation, it would be odd if any relief could be considered if they did not have at least some material impact on the debtor when deciding whether or not to enter the agreement. And thus in Plevin, while the unfairness was said to be the failure to disclose the commission, there was at least a finding that the debtor would have "certainly questioned this" the size of the commission being of "critical relevance" – see paragraph 18 of the judgment. However, the Supreme Court then remitted the case back to the Manchester County Court to decide what relief, if any, under s140B should be awarded. But in a case like the one before me, if in fact the debtors would have entered into the agreement in any event, this must surely count against a finding of unfair relationship under s140A. See also the case of Graves v CHL [2014] EWCA Civ 1297 at paragraph 22 of the judgment of Patten LJ where it was held (among other things) that the impugned conduct of the LPA receivers was not causally related to the loss complained of by Mr Graves.” 59. And of the judgment in Kerrigan, where HHJ Worster held, at paras 213 and 214:

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“Having considered which relationships are likely to be unfair, I turn to the question of relief. The terms of section 140A(1) CCA do not impose a requirement of “causation” in the sense that the debtor must show that a breach caused a loss for an award of substantial damages to be made. The focus is on the unfairness of the relationship, and the court's approach to the granting of relief is informed by that, rather than by a demonstration that a particular act caused a particular loss. Section 140A(1) provides only that the court may make an order if it determines that the relationship is unfair to the debtor. The order must be from the menu of orders provided for under section 140B in connection with the credit agreement, but otherwise there is very little in the way of guidance in the section. As Mr Justice Hildyard put it in his judgment in McMullon v Secure the Bridge Limited [2015] EWCA Civ 884 @ [13]: 'Suffice it to say as to the powers of the court that considerable discretionary latitude is supplied.' That is not to say that the court is free to do anything. Having determined that the relationship is unfair to the debtor, the court will look to relieve that unfairness by making an order or orders under section 140B(1). Whilst HHJ Platts emphasised that his decision as to remedy in Plevin turned on the particular facts of that case and was no precedent, it is a helpful illustration of how the jurisdiction works on well known facts. There is a link between (i) the failings of the creditor which lead to the unfairness in the relationship, (ii) the unfairness itself, and (iii) the relief. It is not to be analysed in the sort of linear terms which arise when considering causation proper. The court is to have regard to all the relevant circumstances when determining whether the relationship is unfair, and the same sort of approach applies when considering what relief is required to remedy that unfairness. If the court decides to make an order, then it "should reflect and be proportionate to the nature and degree of unfairness which the court has found": Patel v Patel [2009] EWHC 3264 (QB) George Leggatt QC at [79]-[80]. It should not give the Claimant a windfall, but should approximate, as closely as possible, to the overall position which would have applied had the matters giving rise to the perceived unfairness not taken place…” The timeshares judicial review - Shawbrook & BPF v. FOS 60. Two decisions of the Financial Ombudsman Service, upholding complaints, were recently challenged by way of judicial review in the High Court in Shawbrook & BPF v. FOS. The Court considered two decisions, issued by me and another ombudsman, concerning the sale of fractional timeshares similar to Mr D’s, paid for with loans provided by Shawbrook Bank Ltd and BPF. In each case, the ombudsman decided the timeshare package had been mis-sold and the contractual arrangement, including the associated loan, should be unwound. Broadly, Shawbrook Bank Ltd and BPF argued that the ombudsman had erred in law in each of the two decisions. 61. Mrs Justice Collins Rice held: (1) The ombudsman in the first case did not err in law in his construction of, or approach to, Reg.14(3) of the Timeshare Regulations. (2) Both ombudsmen did not err in law in concluding that the deemed agency provisions of s.56 CCA, read together with s.140A(1)(c) CCA, meant that the acts and omissions of the timeshare companies in conducting negotiations with consumers antecedent to forming timeshare contracts fell to be regarded by a court as things done or not done by or on behalf of the lenders, for the purposes of considering whether they caused the debtor/creditor loan relationship between lenders and consumers to be unfair.

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(3) In these circumstances, both ombudsmen did not err in law in holding that an unfair relationship had been created for the purposes of s.140A CCA or in providing remedies having regard to the provisions of s.140B. 62. Overall, the claims were dismissed. The judge highlighted that the ombudsman’s task was a “fundamental case-by-case evaluative” one, with a “high degree of fact-sensitivity” (at para 189). In finding there was a breach of Reg.14(3) the first ombudsman made an “entirely fact-sensitive and evaluative decision. The ombudsman did not make a blanket or 'in principle' decision, referable to the inherent qualities and properties of fractional ownership timeshare contracts. It was a decision directed to finding, interpreting and evaluating the material facts and the communications which took place in this particular case” (at para 73). 63. In Shawbrook & BPF v. FOS, Mrs Justice Collins Rice considered the effect of a breach of Reg.14(3) on the question of assessing the fairness of the debtor-creditor relationship. It was held at para 185: “Challenges are made in these proceedings to the adequacy of the evaluation by which the ombudsmen reached their final conclusions of unfairness – in particular to whether they had regard to all relevant matters within the terms of s.140A(2). But the ombudsmen had the full facts and circumstances, as they had found them, firmly in mind. Breaching Reg.14(3) by selling a timeshare as an investment – whether doing so explicitly or implicitly, whether in a slideshow or in a to-and-fro conversation with individual consumers – is conduct that knocks away the central consumer protection safeguard the law provides for consumers buying timeshares. The ombudsmen held the breach in each case to be serious/substantial and the constituent conduct causative of the legal relations entered into: timeshare and loan. As such, it is hard to fault, or discern error of law in, a conclusion that the relationship could scarcely have been more unfair. It was constituted by the acts/omissions of the timeshare companies in the antecedent negotiations leading up to the contractual commitments. Those are acts/omissions for which the banks are ‘responsible’ by operation of law. The timeshare companies and lenders clearly benefited overall thereby and the consumers, as the ombudsmen found as a matter of fact, were disproportionately burdened. No error of law appears from the ombudsmen’s conclusions in any of these respects. I am satisfied their findings of unfairness were properly open to them on this basis alone.” 64. To summarise, the passages in the judgment in Plevin set out above made plain that the breach of a legal duty, such as either the breach of the FCA’s rules by a creditor or the breach of the Timeshare Regulations by a supplier on a creditor’s behalf, is neither a prerequisite for a finding of an unfair debtor-creditor relationship, nor is it an automatic gateway to such a finding. 65. Further, the judgment in Plevin, read alongside that in Carney and Kerrigan, makes clear that in a case such at Mr D’s, an important consideration is whether the relevant misconduct impacted the debtor’s decision to enter into the agreements. Further, in Shawbrook & BPF v. FOS, in dismissing the judicial review claims, including that each ombudsman had not erred in law in their approach to ss.56 and 140A CCA, the judge said at para 185: “The ombudsmen held the breach [of Reg.14(3)] in each case to be serious/substantial and the constituent conduct causative of the legal relations entered into: timeshare and loan.” (emphasis my own)

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66. For those reasons, in my PD, I said that for a breach of Reg.14(3) to lead to an unfair debtor-creditor relationship that requires relief from that unfairness, it was a relevant consideration whether the breach caused the debtor to enter into the timeshare and/or loan agreement. This accorded with common sense: if events would have unfolded in the same way whether or not such a pre-contractual breach had occurred, it may be hard to attribute great importance to the breach when deciding whether an unfair debtor- creditor relationship ensued, or whether a remedy is appropriate. 67. Finally, in relation to any findings in Shawbrook & BPF v. FOS judgment on whether the sale of FPOC Memberships, per se, would have almost certainly breached Reg.14(3), the following passages are important. First, Mrs Justice Collins Rice held that it was not the nature of the membership that breached the Reg.14(3), rather it was the way in which it was sold, at para 66: “My necessary starting point is the ombudsman's explicit acceptance that a fractional ownership timeshare does not inevitably or inherently – purely by virtue of its fractional ownership component – transgress the prohibition in Reg.14(3). That is a point of some importance. Reg.14(3) prohibits the marketing or selling of a timeshare contract as an investment. It does not prohibit the existence of an investment component in a timeshare contract or the marketing or selling of such a product per se. The ombudsman accepted it was at least in principle possible to sell a fractional ownership timeshare without infringing Reg.14(3).” 68. In its submissions (at page 9), PR quotes paragraph 67 of the Shawbrook & BPF v. FOS judgment, arguing that this made clear Mrs Justice Collins Rice found it was “almost an impossibility that the sale of an FPOC Membership would not be caught by regulation 14(3) of the Timeshare Regulations.” That paragraph reads: “His dilemma is, however, apparent as to how, and how far, that 'in principle' possibility is realisable in practice, at least in a case like the Hargreaves'. As Mr Strachan KC put it, what is the point – from any consumer's perspective, but particularly in a like-for-like accommodation rights 'upgrade' – of the fractional ownership dimension if it is not by way of an investment? The consumer gets no use or benefit from the property during the term of the agreement; their interest is in the proceeds of a deferred sale alone. Why would anyone buy that interest if not in the hope of getting more back than they put it in? Why would anyone lay out money only to get less back? What attraction could a fractional ownership timeshare possibly have if not the attraction of a collateral investment? Or – it might be asked – why is it that the marketing and sale of fractional ownership timeshare does not inevitably breach Reg.14(3)?” 69. However, this paragraph is not the judge’s findings on whether all sales of memberships such as Mr D’s necessarily breached Reg.14(3). Rather it is the judge’s summary of the submissions of counsel for the Defendant (Mr Strachan KC). This is demonstrated by the first sentence of the subsequent paragraph – “Mr Herberg's answer to this invites the following analysis.” 70. In finding that the ombudsman in the first case did not err in law in his construction of, or approach to, Reg.14(3) of the Timeshare Regulations, the judge held: “I did hesitate over some of the ombudsman's analysis. In the passages set out at [180]-[188] above there are some indications suggestive of a view that, notwithstanding his express declaration to the contrary, it was the intrinsic design of fractional ownership timeshares, or the simple fact that the consumers were exchanging like-for-like accommodation rights, that led with a degree of inevitability

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to a breach of Reg.14(3). That would, at least potentially, have indicated an error of law. But I remind myself that I am not to make the mistake of reading an ombudsman's decision as if it were a legal judgment. Looking at what the ombudsman said fairly, and as a whole, I can see that he set out the correct test, accepted that it was at least possible for this contract to have been marketed compliantly with Reg.14(3), and, in my view, applied the correct test to the evaluation of the facts as he found them before concluding that it had not been so marketed/sold in this case. I do not see that he lost sight of the 'profit' meaning of investment, made the legal mistake of confusing profit with 'something back', or made an 'in principle' decision about the sale of fractional ownership timeshares where no new accommodation rights are obtained. Instead, he looked at all the circumstances, including the contemporaneous evidence, and concluded that this timeshare contract had in fact been sold as an investment. He found the pure fractional ownership component was given importance by Diamond for the Hargreaves' purposes and portrayed as a significant benefit, quite apart from the reduction in the overall term. He found it was at least implicit in the selling that that benefit was a prospect of financial gain. That was an entirely fact-sensitive and evaluative decision. The ombudsman did not make a blanket or 'in principle' decision, referable to the inherent qualities and properties of fractional ownership timeshare contracts. It was a decision directed to finding, interpreting and evaluating the material facts and the communications which took place in this particular case.” (paras 71-73) (emphasis my own) “My conclusion in these circumstances is that the ombudsman did not make an error of law, but simply made a fact-specific, inferential, evaluation on an application of the Reg.14(3) test to the circumstances of the complaint before him. I am not persuaded he was compelled by law to have taken a different approach or reach a different conclusion. Having said that, however, I endorse the observation made by Mr Jaffey KC, Counsel for BPF, that, whatever the position in principle, it is apparently a major challenge in practice for timeshare companies to market fractional ownership timeshares consistently with Reg.14(3). It is a particularly acute challenge to do so by way of an 'upgrade' which does not confer new accommodation rights, when the fractional ownership component inevitably assumes more prominent proportions in the bargain. Getting the governance principles and paperwork right may not be quite enough.” (para 77) 71. It is clear from those paragraphs that an ombudsman must determine, on the material facts and circumstances of a particular complaint, whether a consumer’s sale breached Reg.14(3). When considering Mr D’s complaint, I am mindful of the judge’s comments where she endorsed the observation that “it is apparently a major challenge in practice for timeshare companies to market fractional ownership timeshares consistently with Reg.14(3).” Plainly, it is inherently more probable that a Supplier could breach Reg.14(3) selling a timeshare with an investment element than one without such an element. However, I do not agree with PR that the judgment in Shawbrook & BPF v. FOS made a finding that “it is almost an impossibility that the sale of an FPOC Membership would not be caught by regulation 14(3) of the Timeshare Regulations.” Each case must be assessed on its own facts and evidence. My assessment of the evidence and Mr D’s points of complaint 72. In my PD I first dealt with the claim Mr D had made under s.75 CCA, before looking at whether I thought BPF was a party to an unfair debtor-creditor relationship. PR has not

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responded to my findings on s.75 CCA at all, so I do not think they are in dispute. But, for the avoidance of doubt, as I have no further representations on those provisional findings I see no reason to depart from them. So I will start by set out my findings on s.75 CCA, before considering the relationship between BPF and Mr D. s.75 CCA – the Supplier’s alleged misrepresentations at the Time of Sale 73. This part of the complaint was made for several reasons, namely: • That FPOC Membership had a guaranteed end date, after 19 years, after which Mr D would have no further legal liability to the Supplier arising out of membership (“the First Misrepresentation”); • That FPOC Membership meant Mr D was buying an interest in a specific parcel of "real property" (“the Second Misrepresentation”); and • That FPOC Membership was an “investment” (“the Third Misrepresentation”) 74. On balance, I was not satisfied that any of these allegations led to a misrepresentation for which BPF could be liable. I will explain my findings on each allegation in turn. The First Misrepresentation 75. In the Letter of Claim, PR referred to three representations that it said were untrue: "There is a guaranteed end date to the scheme" "After the 19 year limit it would be sold" "The property will be sold and you will get something back, based on current market value" 76. Explaining the effect of these phrases, PR said it was only the sales process that started after nineteen years, under which there was no guarantee the Property would be sold and Mr D would have still been responsible for maintenance fees until the Property was sold. Further, PR alleged that the Supplier retained control of the sales process by being able to vote not to sell the Property, therefore obtaining ongoing maintenance fees. 77. The phrases set out above appeared in precisely this way in the Letter of Claim. Listing a sequence of words or phrases was not, in my view, a helpful way of setting out the alleged misrepresentations as I simply did not know in what context Mr D alleged these phrases were used. I also found it unlikely that Mr D would have been able to remember the specific words used, especially as the Letter of Claim was drafted around four years after the Date of Sale. Further, none of those elements were expanded on in Mr D’s more recent witness statement. On the face of it, those representations appeared to be a factual description of how the scheme worked – that after nineteen years, the Property was placed for sale and the proceeds divided amongst FPOC Members whose memberships were linked to that property. 78. I considered the documentation provided to Mr D at the time of sale to see whether they helped determine how the end of FPOC Membership was presented. He was provided with a nine-page document titled “FRACTIONAL PROPERTY OWNERS CLUB INFORMATION STATEMENT”. This document contained information that the Supplier provided under its obligations in the Timeshare Regulations. On page two of the document it was written:

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“Your Fractional Rights will start on the date shown on the Purchase Agreement and expires automatically when your Allocated Properly is sold. There is a provision for distribution of funds or assets to Owners at a future Sale Date after the payment of any taxes and all costs related to that Allocated Property as described in the Rules.” 79. And on page three: “Each Allocated Property is or will be legally owned or controlled by a UK company (Owning Company) which will be controlled either directly or indirectly by the Trustee, operating in accordance with the Deed of Trust…The Owning Company will retain such Allocated Properly until the automatic sale date in 19 years time or such later date as is specified in the Rules or the Fractional Rights Certificate. The Trustee will manage the sales process of the Allocated Property and following a sale distribute the net proceeds among the Owners and the Vendor. Each Owner will be entitled to a distribution as set out on the Fractional Rights Certificate for each Weekly Period held under a Fractional Rights Certificate subject to being in good standing and up to date with Management Charges. The Vendor is entitled to use up to 4 weeks for maintenance (and Week 53 when it occurs) during the term of the Project and a similar fractional share for anything else held as if an Owner for any other Fractional Rights which are unsold or have been acquired by the Vendor. The Rules provide for mechanisms to postpone the sale date in certain circumstances… … Exact period within which the right which is the subject of the contract may be exercised and, if necessary, its duration: … Your Fractional Rights will start on the date shown on the Purchase Agreement and expires automatically when the Properties are sold.” 80. I could not be certain that Mr D read the information statement before he took out FPOC Membership, but I thought that document made it sufficiently clear that the membership ended when the Property was sold and not on the date the Property was put up for sale. I also considered the sales presentation materials that the Supplier used around the time of Mr D’s sale to see if they set out anything differently, meaning that Mr D might have been told that there was a guaranteed end date to FPOC Membership. 81. I had seen a set of slides that were used around two years before Mr D’s sale. In those slides, it was said: “16 years later the property is sold. You receive your share of the sale of the property” 82. In a set of slides that were in use a year after Mr D’s purchase, it was said: “19 years later the property is sold. You receive your share of the sale of the property” 83. Given those slides, I thought it likely Mr D was told something similar, that after a set period of time the Property would be sold and then the proceeds divided amongst the members. I could not see any evidence that the Supplier routinely told its prospective customers that there was a guaranteed end date to membership when liabilities would cease. 84. It seemed to me that the statements "[a]fter the 19 year limit it would be sold" and "[t]he property will be sold and you will get something back, based on current market value"

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were simply factual descriptions of how FPOC Membership worked and I could not see how they could be misrepresentations, given that they appeared to be true. The only difference between what Mr D said he was told and what the other evidence showed was that Mr D says the Supplier said there was a guaranteed end date to the scheme, but that was not true as the sale was not guaranteed. But, having considered everything, I did not find that the Supplier made such a representation. I did not think saying that there was a guaranteed end date to FPOC Membership would be consistent with the information set out in the Information Statement and I had not seen anything to suggest the Supplier would have made a different representation orally. I also noted that it is common sense that there cannot be a guarantee that a specific property could be sold on a specific day, some nineteen years in the future, so I thought it inherently unlikely such a representation was made. On balance, I simply did not think it is likely Mr D was told his membership was guaranteed to end on the date the Property was placed for sale as set out in the membership documentation. Rather I thought it was more likely the Supplier was either silent on the matter or told him how the sales process worked in practice – namely that after a set period, the Property was placed for sale and the membership ended when it was sold. 85. PR also said that the FPOC Membership Rules (“the Rules”) meant that the Supplier had an interest in not selling the Property as it could then continue to charge maintenance fees on the unsold property. However, I disagreed that was the right reading of the Rules. Part 9 of the Rules dealt with how the Property would be sold. A key provision is Rule 9.1: “Each Allocated Property shall be sold on its respective Sale Date5 which occurs on the date specified in the Fractional Rights Certificate for the Allocated Property, save that the Vendor may, in its absolute discretion, postpone the date of sale from the date proposed as the Sale Date for up to two years. By unanimous consent of the Owners in that Allocated Property given in writing, the sale may be postponed for such period as is agreed in such consent.” 86. I said that PR was right that, until the Property is sold, members have to pay ongoing maintenance fees, however I could not see that Mr D alleged in either the statements referred to in the Letter of Claim, nor in his witness statement, that he was told on a set future date his liabilities to the Supplier to pay maintenance fees would end. So I could not say this was misrepresented to him. 87. Finally, I could not see that Mr D had alleged that he was told anything about the Supplier being able to stop or delay the sale, so I could not see that this was misrepresented to him. But, in any event, I thought PR’s reading of the Rules was wrong.6 I said that because, although there is a clause that if the Property is not sold after eighteen months, a meeting would be called where “all Owners shall decide whether or not to continue using the Property and under what terms”, Rule 9.1 makes clear that any decision to postpone the sale must be unanimous. So I could not see how the Supplier could unilaterally postpone a sale indefinitely. I noted that the Vendor (a company associated with the Supplier) could postpone a sale for up to two years, but again, I failed to see how the inclusion of this term meant Mr D was misled about the sale, based on his own recollections. The Second Misrepresentation 5 This is defined as the date on which the sale process for an Allocated Property beings. 6 This also meant I did not make any finding as to whether these terms breached the UTCCRs or the CPUTRs, as I disagreed with PR’s understanding of these terms.

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88. In the Letter of Claim, PR had not set any words or phrases that Mr D recalled being used. Again, this was not expanded on in his more recent witness statement. However, telling prospective members that they were buying a fraction or share of one of the Supplier’s properties was not untrue. Further, I could not see that Mr D was told anything other than at the end of his membership term, the Property would be placed on the market and sold, after which he would get a proportion of the sale proceeds. So I thought Mr D did buy an ‘interest in real property’, namely an interest in the sale proceeds. I simply could not see he was misled about this. The Third Representation 89. In the Letter of Claim, PR said Mr D was told: "This is a good investment" "Ownership of a share in property" 90. Again, I did not know in what context it was alleged these words or phrases were used, and again I found it unlikely Mr D could remember the exact words used at the Time of Sale. Further, beyond listing the two phrases, PR did not expand this further to say why Mr D thought being told this was an investment was untrue. However, Mr D did expand on this in the passages of his witness statement set out above. 91. FPOC Membership clearly had an investment element to it (the interest in the sale proceeds of the Property). It followed that if Mr D was told that FPOC Membership was an investment – and I made no finding on that in this section of my decision – that would not have been untrue, so it could not have amounted to a misrepresentation. 92. For these reasons, therefore, I did not think BPF was liable to pay Mr D any compensation for the alleged misrepresentations of the Supplier. And with that being the case, I did not think BPF acted unfairly or unreasonably when it dealt with the s.75 CCA claim in question. 93. Having reconsidered the evidence and in light of PR not making any submissions on these issued, I do not depart from my provisional findings on Mr D’s complaint about BPF’s assessment of its liability under s.75 CCA. s.140A CCA – did BPF participate in an unfair debtor-creditor relationship? 94. I have explained why I am not persuaded that the contract entered into by Mr D was misrepresented by the Supplier in a way that makes for a successful claim under s.75 CCA. But PR also alleged that the credit relationship between BPF and Mr D was unfair under s.140A CCA, when looking at all the circumstances of the case, including parts of the Supplier’s sales process at the Time of Sale. In my PD, I explained why I disagreed with PR. 95. After setting out the law, I explained that I had considered the entirety of the credit relationship between BPF and Mr D along with all of the circumstances of the complaint. Having done so, I did not think the credit relationship between them was likely to have been rendered unfair for the purposes of s.140A CCA. When coming to that conclusion, and in carrying out my analysis, I looked at all the evidence provided to me from both parties, including the Supplier’s sales process at the Time of Sale. I then considered the impact of that on the fairness of the credit relationship between BPF and Mr D. The Supplier’s sales & marketing practices at the Time of Sale

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96. PR, on behalf of Mr D, argued for a number of reasons why the relationship between BPF and Mr D was unfair as defined by s.140A CCA, including that there was a pressured sale by the Supplier. 97. PR pointed to the CPUTR, which applied to Mr D’s sale. Those regulations prohibited specified unfair commercial practices, which included aggressive commercial practices (Reg.7). In short, a commercial practice was aggressive if it significantly impaired (or was likely to significantly impair) an average consumer’s freedom of choice or conduct in relation to a product through the use of harassment, coercion or undue influence and caused them to take a transactional decision they otherwise would not have taken. As noted above, to cause an unfair debtor-creditor relationship, there need not be a breach of a specific regulation, so it may be that a pressured sale that did not go so far as to breach this regulation could still give rise to an unfair relationship. 98. In my PD, I noted that in both Mr D’s witness statement and PR’s Letter of Claim, the sales environment was described as intense and long lasting, in an uncomfortable and warm room. Mr D said he felt pressured to take out FPOC Membership and felt that there was no possibility of leaving the sales room, although he had not explained why he felt that way nor has he said the Supplier did anything to actually stop him and his wife leaving. Finally, Mr D said he had accepted several glasses of wine during the sales process, which I took as Mr D saying his decision making process may have been impaired. I thought it was possible that all of these allegations, when taken together, could amount to a breach of the CPUTR and/or a pressured sale. But I did not make any formal finding on that point for the reasons I explained. 99. I noted that finding that pressure was applied during a sale is not the same as finding that there was an unfair debtor-creditor relationship caused by that pressure. So I thought about whether the alleged level of pressure applied was such to cause Mr D to buy something he otherwise would not have done or was such to have caused an unfair debtor-creditor relationship. 100. In this case Mr D explained that he already held a trial membership with the Supplier and one of the reasons he took out FPOC Membership was that the trial membership was going to expire without him taking any holidays due to his work commitments. Given that, he was able to trade in the trial membership and obtain a reduction in the cost of FPOC Membership, so purchasing FPOC Membership was a way of getting some benefit from his existing outlay on trial membership. Further, in PR’s Letter of Claim, it was said that FPOC Membership was “extremely attractive to our clients, because the membership was sold to our clients on the basis that the Scheme had a fixed duration of 19 years from 2013” and, having been shown the accommodation on offer, Mr D was “enticed" by the idea of having "wonderful holidays in the sun". So I said it appeared that there were significant reasons why Mr D was interested in FPOC Membership, other than the level of pressure applied by the Supplier. 101. It seemed to me that, as Mr D already had a membership with the Supplier and described some of the holidays he expected to take with FPOC Membership as one of the positive benefits of membership, he was interested in taking holidays with the Supplier. Further, Mr D was given a fourteen-day cooling off period and he had not provided any explanation for why he did not cancel FPOC Membership during that time. So, even if I were to find the Supplier applied pressure in the way Mr D alleged (and I made no such finding), I did not think that was so strong to have caused him to take out a membership he otherwise would not have done. Nor did I find that the level of pressure in the sales caused an unfairness in the credit relationship between BPF and Mr D that warranted relief.

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102. PR responded to my findings. It said: “Again, this demonstrates a lack of understanding as to how timeshare sales operate. Once signed up, a consumer will be pressured on all holidays to “upgrade”. To say the environment was “relaxed” is quite an assumption, considering the Ombudsman was not present and that the average member of the public will tell you that timeshare sales presentation are intense. The client has confirmed he was pressured to attend presentations that lasted a whole day to persuade him to part with more money for a “better” time share product. The Supplier does not appear to have denied this as being the case. In addition, the all-day presentation was described as an “update”. If there was no pressure, why was it not described to the consumers as an “all-day presentation”?” 103. However, this is not what I said in my PD. I did not say the sales environment was relaxed, nor did I make a finding that I disbelieved Mr D when he said the sale was intense or that there was no pressure. I understand that Mr D says the sale lasted all day, was intense and that he found it to be pressured. But for the reasons set out above, I found that there were other reasons, in addition to any pressure, that Mr D chose to take out FPOC Membership. And I did not find that the level of pressure itself led to an unfair debtor-creditor relationship between Mr D and BPF. Having considered what PR has said on this issue, I have not changed my mind from my provisional findings. Was Fractional Club membership marketed and sold at the Time of Sale as an investment in breach of Reg.14(3) of the Timeshare Regulations? 104. In my PD, I then went on to consider what appeared to me to be the central issue in this complaint – whether FPOC Membership had been sold to Mr D in breach of Reg.14(3) of the Timeshare Regulations. 105. PR asked me to consider the effect of the judgment in Shawbrook & BPF v FOS, whether Mr D’s sale of FPOC Membership breached the Timeshare Regulations and other ombudsman’s decisions on the Supplier’s sales practices. Given those requests, I took it to mean that PR were alleging that the sale breached Reg.14(3) of the Timeshare Regulations, thus leading to an unfair debtor-creditor relationship. 106. Having considered everything, I did not find that the FPOC Membership was sold to Mr D in a way that breached Reg.14(3). But I said that if I was wrong about that, I was not persuaded that any breach led to an unfair debtor-creditor relationship in this case. Having reconsidered everything, those are still my conclusions. 107. I said that it was not in dispute that FPOC Membership met the definition of a “timeshare contract” for the purposes of the Timeshare Regulations, and therefore Reg.14(3) applied to the sale. PR said that the Supplier breached Reg.14(3) by selling FPOC Membership to Mr D as an investment. 108. The term “investment” is not defined in the Timeshare Regulations. In Shawbrook & BPF v. FOS, the parties agreed that, by reference to the decided authorities, “an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit” (para 56). I said I would use the same definition. 109. When considering whether the sale breached Reg.14(3), it is important to consider the way in which the FPOC Membership was positioned by the Supplier when it was

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sold. As set out above, the FPOC Membership had an investment element to it – the interest in the sale proceeds of the Property that offered the potential of a financial gain. I explained that merely selling such a membership did not breach the prohibition in Reg.14(3). Rather, that provision was only breached if the Supplier sold or marketed FPOC Membership as an investment. In other words, I thought that for me to say there was a breach of Reg.14(3), I would need to be satisfied that it was more likely than not that the Supplier used the prospect of a financial gain as a way to sell or market FPOC Membership to Mr D, given the facts and circumstances of this complaint. Therefore, the Timeshare Regulations did not ban the sale of products such as FPOC Membership. They just regulated how such products were marketed and sold. 110. In response to my PD, PR said: “Our view is that the word “investment” incorporates other advantages of a product, such as a shorter term, more points, etc. Where has the definition of “investment” been taken from? The same is also true of the use of the term “marketed”. What definition has the Ombudsman used? No evidence is provided. Our view is that “marketed” should include anything said or used by the sales staff. Does the Ombudsman agree? If so, given that it has been agreed that the FPOC product was an “investment”, as soon as the product is described, it must be “marketed” as an “investment” mustn’t it?” 111. But, as set out above, I explained that I took the definition of “investment” from the judgment in Shawbrook & BPF v. FOS and I had set out what I had in mind when considering whether FPOC Membership was marketed or sold as an investment. 112. It follows from this that I disagree that merely describing the features of FPOC Membership to Mr D inevitably led to a breach of Reg.14(3) of the Timeshare Regulations, rather it was only a breach if the Supplier told Mr D or led him to believe that FPOC Membership offered him the prospect of a financial gain. 113. Here, when determining what happened, I have to make findings on the balance of probabilities. In doing so, I have to consider what both parties said happened and weigh that up against the other available evidence. So the starting point is to consider what complaints were made and then consider the evidence to determine whether I find those complaints are made out. 114. When Mr D first complained to BPF, PR set out his concerns and problems he said there were with FPOC Membership. On page two of the Letter of Claim, there is a section titled “The circumstances in which our client entered into the Fractional Property Ownership Scheme”. Set out in that section was a narrative description of the sale process, including the allegations of pressure and being shown the Supplier’s properties and brochures that enticed Mr D into membership. PR also set out that the nineteen- year membership term was attractive to Mr D. The letter said “[as] a result of the above, our clients agreed to purchase 1010 Fractional Points”. At that stage PR did not allege that anything said about the investment potential of FPOC Membership was something that caused MR D to take it out.

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115. PR did set out at page 8 of the Letter of Claim some statements Mr D said were made by the Supplier’s sales agents, which I have already considered above in respect of s.75 CCA. In my PD, I explained that of those statements, I thought the following were factual statements setting out how FPOC Membership worked, and did not state that Mr D was told he would make a profit or other financial gain when the Property was sold and the proceeds of sale distributed amongst the relevant FPOC Members: "There is a guaranteed end date to the scheme" "After the 19 year limit it would be sold" "The property will be sold and you will get something back, based on current market value" "Ownership of a share in property" 116. In fact, the statement “you will get something back, based on current market value" appeared to me to specifically address that the amount someone would receive would be dependent on the state of the property market at the time of sale. 117. I did note that PR said Mr D was told "This is a good investment", but it had not been set out in any wider context why Mr D was led to believe that was the case. Further, as set out above, this was not something Mr D pointed to when describing the sale in the Letter of Claim. I also looked at Mr D’s later witness statement where he set out in detail his recollections of the sale. Again, much of what was said was a factual description of how FPOC Membership worked in practice, but at paragraph 10 he said: “We did so on the basis that not only would it give us luxury holidays for 19 years, but it would also be a good investment, as it would secure us a return when the property was sold.” So I considered that further. 118. I said that I was conscious that Mr D’s only written testimony was given to us in November 2023, after the outcome of Shawbrook & BPF v. FOS where it was held that in some circumstances a breach of Reg.14(3) could lead to an unfair debtor-creditor relationship. That statement was drafted over ten years after the Time of Sale, so I found it hard to place significant weight on Mr D’s recollections given that memories naturally fade over the passage of time. Further, there seemed to me to be a very real risk that Mr D’s recollections were coloured by the Shawbrook & BPF v. FOS judgment. In saying that, I was conscious of what was said by Mrs Justice Thornton in the judgment in Smith v. Secretary of State for Transport [2020] EWHC 1954 (QB), where it was held, at para 40: “In assessing oral evidence based on recollection of events which occurred many years ago, the Court must be alive to the unreliability of human memory. Research has shown that memories are fluid and malleable, being constantly rewritten whenever they are retrieved. The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial.” So I thought more widely about what Mr D said when the complaint was first made, as that was closer in time to the Time of Sale.

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119. I noted that at the time PR referred Mr D’s complaint to our service, that it also sent a letter to our then Chief Ombudsman. In that letter it set out that it thought there was a pattern of sales issues it had seen over a number of complaints. In particular it said: “The sale of [FPOC Membership] is characterised by a consistent pattern of statements made by [the Supplier]'s sales representatives to this effect: … (2) That [FPOC Membership] represents the opportunity for a return or even profit and that the purchase represents some sort or "investment" or as likely to allow the client to recoup money spent on the points based scheme. Statements used to suggest this include statements to the effect that the scheme represents a purchase of "an investment" in "bricks and mortar" and that "as we all know property always goes up" and that there is considerable investor interest in the resort or resorts at which the property referred to is situated, in short, great play is made of a supposedly buoyant property market at that resort.” 120. But despite PR alleging that this was a common problem it had identified, it did not raise any specific allegation in Mr D’s case that the Supplier had positioned the fractional element of FPOC Membership as a way of generating a profit – in fact it was suggested that Mr D was told he would get something back, based on current market value, which did not, in my view, amount to a breach of Reg.14(3) of the Timeshare Regulations. It was only after the judgment in Shawbrook & BPF v. FOS was handed down, that PR suggested FPOC Membership had been sold to Mr D in breach of the Timeshare Regulations. I found it difficult to understand why, if FPOC Membership had been sold as an investment and PR was aware that was a common problem in the way the Supplier sold memberships, this was not set out in any detail in Mr D’s original Letter of Claim. 121. Instead, it was specifically set out in the Letter of Claim why Mr D went on to buy FPOC Membership. Those reasons included the ability to trade in his trial membership and therefore get something out of it before it expired, the quality of the accommodation he was shown, the defined nineteen-year membership period, details of the resorts available to FPOC Members and the alleged pressured sale. But tellingly in my view, it was not said Mr D took out FPOC Membership to make a profit or financial gain. This was despite the Letter if Claim being lengthy and setting out, in some detail, Mr D’s memories of the sale. On balance, I thought that Mr D’s evidence described being told by the Supplier that he would receive the net sale proceeds of his share in the Property once it was sold, rather than suggesting that the Supplier led him to believe FPOC Membership would lead to a financial gain (i.e., a profit). I thought that did not amount to a breach of Reg.14(3) of the Timeshare Regulations. 122. I looked at the FPOC Membership agreement and other documents from the Time of Sale, but I did not think they were conclusive on whether FPOC Membership was to be seen as an investment. For example, the Information Statement used in Mr D’s sale says: “The purchase of Fractional Rights is for the primary purpose of holidays and is neither specifically for direct purposes of a trade in nor as an investment in real estate.” So I thought the Supplier did attempt to say that FPOC Membership was not an investment. But I said that had to be read in conjunction with the section of the same document titled “Investment advice”, where the Supplier explained that neither it nor the

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sales staff were licenced to provide investment advice and customers were advised to get their own investment advice. I accepted that the disclaimer was aimed at ensuring that prospective members do not take and rely on what they were told by the Supplier as investment advice or an assurance as to the future value of the Property. However, having said that, I noted that the disclaimer suggested that (1) the “Vendor’s” and “Manager’s” experience as investors had fed into the information provided during the sales presentations and (2) prospective members might be wise to consult an investment advisor. And, in my view, both of those suggestions, particularly the latter, ran the risk of giving a prospective FPOC member the impression that there was investment potential to what was being sold. 123. Taken as a whole, in my view the documentation Mr D was given was ambiguous as to whether FPOC Membership was to be seen as an investment. I thought that fit with the inherent nature of FPOC Membership, having an investment element contained within. In my view, the documentation used at the Time of Sale was not sufficient to conclude, one way or the other, whether the sale breached Reg.14(3). 124. I also considered whether the Supplier could have breached Reg.14(3) orally during Mr D’s sale. I was aware that the Supplier used slides during the sales process around the time of Mr D’s sale, but he had not pointed to remembering any slides or other sales aids giving him the impression that FPOC Membership was an investment. Having looked at slides that the Supplier used when selling memberships like Mr D’s, I thought they did show a deliberate choice to highlight the potential monetary return available from fractional membership when selling it, leaving open the real possibility that fractional memberships were presented to customers as investments. 125. However, in coming to a determination on whether Mr D’s actual sale breached Reg.14(3) of the Timeshare Regulations, I said I had to weigh up all of the evidence, including both what I knew about how the Supplier sold timeshares at the Time of Sale, the documentary evidence available and Mr D’s own evidence. I said the assessment of that evidence is something I must do in the round, so considering what Mr D remembered of the sale and then comparing it with the available documentary evidence. Having done so, I was not persuaded, on the balance of probabilities, that the Supplier sold FPOC Membership to Mr D as an investment. It followed that I did not think that there was a breach of Reg.14(3) that could have led to an unfair debtor-creditor relationship. But I said if I was wrong about that and the Supplier did breach Reg.14(3) in the way it sold Mr D FPOC Membership, for the reasons I went on to explain, I did not think that made a difference to the outcome of this complaint. 126. PR did not agree with my provisional findings. It argued that I had, in an earlier decision PR referred to as the Second Precedent, found that a membership similar to Mr D’s FPOC Membership had been presented as an investment due to the use of a particular set of slides. Further, that it was immaterial whether a consumer alleged that they had seen that set of slides as it had been said that the Supplier had, in that earlier decision, accepted that those slides would have been used in sales at the time. 127. However, as noted above, the decision an ombudsman reaches in one complaint does not bind another ombudsman in a different complaint. So, just because I found the Supplier had breached Reg.14(3) in the sale of a timeshare similar to Mr D’s, it does not follow I must make the same finding again in another complaint. Rather, my role is to make a finding based on the evidence in Mr D’s complaint and that evaluation will be fact-specific to this complaint. 128. In one of the decisions that was the subject of Shawbrook & BPF v. FOS (the one PR referred to as the Second Precedent), I considered a set of slides that were used in that

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sale. I found that those slides had the word ‘investment’ within them and, in the circumstances of that complaint, all of the evidence persuaded me that there was a breach of Reg.14(3). However, in this complaint the evidence is different. First, I do not think the Supplier used the same set of slides when selling FPOC Membership to Mr D. That is because the slides I referred to in that other decision referred to a product the Supplier sold that it called ‘FPOC1’, whereas Mr D bought a product referred to as ‘FPOC2’. Secondly, Mr D has not referred to being shown any slides that included the word ‘investment’ in them at the Time of Sale. 129. PR has also pointed to a training manual from the Supplier that it says makes reference to a ‘return’, indicating that memberships were sold as investments – PR’s full submission reads: “Moreover, the guidance provided to [the Supplier’s] sales staff (a copy of which is attached) makes reference to a “return”. The suggestion that this was not the primary driver for any sale of a fractional product is, quite frankly, perverse.” 130. PR did not actually provide a copy of any guidance along with its submissions, but I do not agree the inclusion of the word ‘return’, in isolation, is suggestive of memberships being sold as investments. 131. After PR first responded to my PD, I sent it three documents and asked for any further comments on them before I issued my final decision. Those documents were: • a document called “2011 Spain FPOC1”, which was a set of slides used by the Supplier when marking FPOC1 and which were considered in the decision that was subject of Shawbrook & BPF v. FOS. As noted above, these slides were not used in Mr D’s sale. • A document titled “FPOC ESA 2014(1)”, which was a set of slides that were used to sell memberships similar to Mr D’s (FPOC2) but they were in use from the year after his sale. These were the slides that were used closest in time to Mr D’s sale to sell the same product. • A document called “FPOC2 Training Handout”, which was guidance the Supplier gave to its sales staff on how to sell FPOC2 products. I explained that I was not aware of precisely when this was in use. 132. PR provided ten-pages of submissions in response that say, in summary, that the Supplier would have sold FPOC Membership to Mr D as an investment.7 PR highlighted parts of the FPOC2 Training Handout that it said encouraged customers to consider the difference between renting something and buying it and the ides of building equity in a property. It said that the way FPOC Membership was marketed was positioned as a way of building wealth over time. After analysing a number of slides, PR makes the point that: “if a supplier implied to consumers that future financial returns (in the sense of possible profits) from a timeshare were a good reason to purchase it, we think its conduct was likely to have fallen foul of the prohibition against marketing or selling the product as an investment.” 133. In conclusion, PR said: 7 These submissions have been taken, almost word for word, from a decision issued by a different ombudsman.

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“We think the Supplier’s sales representatives were encouraged to make prospective Fractional Club members consider the advantages of owning something and view membership as an opportunity to build equity in an allocated property rather than simply paying for holidays in the usual way. That was likely to have been reinforced throughout the Supplier’s sales presentations by the use of phrases such as “bricks and mortar” and notions that prospective members were building equity in something tangible that could make them some money at the end and, as the Fractional Club Training Manual suggests, that much would have been made of the possibility of prospective members maximising their returns (e.g., by pointing out that one of the major benefits of a 19-year membership term was that it was an optimum period of time to see out peaks and troughs in the market), we think the language used during the Supplier’s sales presentations was likely to have been consistent with the idea that Fractional Club membership was an investment. Overall, therefore, as the slides referred to above seem to reflect the training the Supplier’s sales representatives would have got before selling Fractional Club membership and, in turn, how they would have probably framed the sale of the Fractional Club to prospective members. They indicate that the Supplier’s sales representative was likely to have led our clients to believe that membership of the Fractional Club was an investment that may lead to a financial gain (i.e., a profit) in the future. With that being the case, we don’t find them either implausible or hard to believe when they say they were told they could get money back and that it was like owning a house rather than renting (which appears to be a direct reference to some of the renting vs owning aspects of the sales materials detailed above). And, that it was a good investment for their future, and they would make a profit on the sale. On the contrary, in the absence of evidence to persuade you otherwise, we think that’s likely to be what our clients were led by the Supplier to believe at the relevant time. And for that reason, we think the Supplier breached Regulation 14(3) of the Timeshare Regulations.8” 134. As noted above, I cannot be sure that Mr D was shown slides as set out in the FPOC ESA 2014(1) or the FPOC2 Training Handout, as it is not clear that these were being used at the Time of Sale. The slides that were used when selling the earlier, FPOC1 product, were, as far as I am aware, still in use at the Time of Sale, but I do not think Mr D would have been shown them as he did not buy that particular product. Mr D has not said he recalls being shown any slides, so his memories do not assist me in deciding what, if anything, he was shown. 135. However, I do think the documents I have seen are indicative of how the Supplier was likely to have positioned FPOC Membership to its customers. And, as I noted in my PD, I think it is likely that the Supplier deliberately chose to highlight the nature of FPOC Membership, including the monetary returns available at the end of the membership term, when selling it. It means that, as PR noted in the first paragraph of its conclusions I set out above, the language used in Mr D’s sale was likely consistent with the idea that FPOC Membership was an investment. But using language consistent with that is not the same as concluding that the Supplier marketed or sold FPOC Membership as an investment, or that the Supplier used the prospect of a financial gain or profit (as opposed to simply highlighting the potential to get some money back at the end of membership) as a way to market or sell to Mr D in this case. In other words, the documents referred to are evidence that could be used to support an allegation that a 8 I do not think much of this paragraph applies to Mr D’s complaint. For example, he has not alleged that he was told that FPOC Membership was like owning a house. Instead, it appears to relate a different consumer’s allegations.

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sale breached Reg.14(3) and are part of the factual matrix that includes all of the other documentation from the Time of Sale and Mr D’s own memories. 136. As noted in my PD, the assessment of the evidence is something I must do in the round, so considering what Mr D remembered of the sale and then comparing it with the available documentary evidence. And, as set out above, I did not find that Mr D complained about the Supplier selling or marketing FPOC Membership to him as an investment when he first complained and, had this been something that had happened to him, that was something I would have expected to have been set out in detail in the Letter of Claim. Further, even with Mr D’s more recent Witness Statement, I do not have particularly detailed memories from him as to why he believes FPOC Membership was sold to him as an investment. So when I consider all of the facts in this case, even though I accept that it is likely the proceeds of the sale of the Property were likely to be highlighted to Mr D, I do not find they were put in such a way that positioned FPOC Membership to him as an investment, nor that this particular sale breached Reg.14(3) of the Timeshare Regulations. 137. However, as I said in my PD, if I am wrong about that I do not think it makes a difference to the outcome in Mr D’s complaint as, even if the sale did breach Reg.14(3), I do not think it led to an unfair debtor-creditor relationship that requires a remedy. If there was a breach of Regulation 14(3), was the credit relationship between BPF and Mr D rendered unfair? 138. Even if the Supplier had breached Reg.14(3), that is not an end of the matter. In my PD, I set out the law on s.140A CCA and why, in my view, even if the sale in Mr D’s case had breached Reg.14(3), it did not automatically lead to an unfair debtor-creditor relationship that required a remedy, nor did it do so in this case. Having considered everything again, I have come to the same conclusion. 139. As noted above, to find there was an unfair debtor-creditor relationship that requires relief from the unfairness, it is relevant to consider whether the breach led the debtor to enter into the timeshare and/or the loan agreement. As I set out above, this accords with common sense: if events would have unfolded in the same way whether or not such a pre-contractual breach had occurred, it may be hard to attribute great importance to the breach when deciding whether an unfair debtor-creditor relationship ensued, or whether a remedy is appropriate. 140. Here, Mr D simply did not allege in the Letter of Claim that the Supplier sold FPOC Membership as a way to make a financial gain or profit, which is something I would have expected to have been included if it was important to him or caused him to enter into the timeshare and/or the loan agreement. But what was included in Mr D’s Letter of Claim was a list of reasons he agreed to take out FPOC Membership, including it being a way of getting some benefit from his existing trial membership, that it had a fixed duration and because Mr D wanted to use the Supplier’s accommodation. Given that Mr D did not suggest FPOC Membership being sold or marketed as an investment was one of the reasons he chose to take it out, it follows, I cannot say that even if it was sold in that way, it had a causative effect on his decision to take it out. It follows, even if the alleged breach of Reg.14(3) was true, I cannot say it caused the debtor-creditor relationship to be unfair to him, nor that it was something that warranted relief in the circumstances of this case. 141. On balance, therefore, even if the Supplier had marketed or sold FPOC Membership as an investment in breach of Reg.14(3), I am not persuaded that Mr D’s decision to purchase it at the Time of Sale was motivated by the prospect of a financial gain (i.e., a

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profit). On the contrary, I think the evidence suggests there were other, specific reasons why Mr D wanted to purchase FPOC Membership, not least because it meant he received some benefit from his trial membership that was close to expiring. It follows, I think he would have bought the FPOC Membership irrespective of whether there had been a breach of Reg.14(3). And for that reason, I do not think the credit relationship between BPF and Mr D was unfair to him even if the Supplier had breached Reg.14(3). 142. So, for this reason, given all the circumstances of this complaint, I am not persuaded, on the balance of probabilities, that (a) the Supplier did breach of Reg.14(3) in Mr D’s sale; or (b) if there was such a breach, that led to a credit relationship that was unfair to Mr D for the purposes of s.140A CCA. Other matters 143. In response to my PD, PR also raised a new argument, that the Supplier was not authorised or permitted to sell investments by the Office of Fair Trading (“OFT”) or the FCA. PR has argued that meant the Supplier acted outside the scope of its regulation and has breached the general prohibition and, as such, the agreement is unenforceable – I have taken this to mean s.19 of the Financial Services and Markets Act 2000 (“FSMA”). PR also said this led to an unfair relationship between Mr D and BPF. Although BPF has not had the opportunity to deal with this new allegation, I will deal with it briefly as I think it is misconceived and, as PR ought to know, was dealt with in Shawbrook & BPF v. FOS. 144. Buying an interest in the sale proceeds of real property, such as was provided by Mr D’s FPOC Membership, would amount to a collective investment scheme (“CIS”), unless it fell into a particular, defined category of arrangement (s.235 FSMA). But Mr D’s FPOC Membership did not amount to a CIS as timeshare contracts were specifically excluded as being treated as a CIS (Paragraph 13 of the Schedule to The Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001, as inserted by the Timeshare Regulations). So the regulation of Mr D’s FPOC Membership was governed by the Timeshare Regulations and not FMSA. It follows, the Supplier did not need the authorisation or permission PR argues it needed. Conclusion 145. In conclusion, therefore, given all of the facts and circumstances of this complaint, I do not think the credit relationship between BPF and Mr D was unfair to him for the purposes of s.140A CCA. And taking everything into account, I think it is fair and reasonable to reject this aspect of the complaint on that basis. 146. Having found that BPF are not a party to an unfair debtor-creditor relationship as defined by s.140A CCA, nor that it was jointly liable for any misrepresentation under s.75 CCA, and seeing no other reason why it would be fair to direct BPF to pay anything to Mr D arising out of the sale of FPOC Membership, I do intend to uphold this complaint. My final decision 147. I do not uphold Mr D’s complaint against Clydesdale Financial Services Limited, trading as Barclays Partner Finance. 148. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr D to accept or reject my decision before 11 October 2024.

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Mark Hutchings Ombudsman

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