Mitsubishi HC Capital UK PLC · DRN-6265938

The complaint Mr O’s complaint is, in essence, that Mitsubishi HC Capital UK PLC (the ‘Lender’) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with him under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying claims under Section 75 of the CCA. What happened Mr O and Mrs O were members of a timeshare provider (the ‘Supplier’) – having purchased membership in a product that I’ll call the ‘Fractional Club’ – points in which Mr O and Mrs O purchased on the dates below: • 1200 fractional points on 14 October 2016 for £13,449 (Purchase Agreement 1) • 900 fractional points on 19 April 2017 for £5,499 (‘Purchase Agreement 2’) As this complaint is concerned with the purchases on 14 October 2016 and 19 April 2017 those are the ‘Times of Sale’ for the purposes of my decision. Fractional Club membership was asset backed – which meant it gave Mr O and Mrs O more than just holiday rights. It also included a share in the net sale proceeds of a property named on the relevant purchase agreement (which I’ll refer to as the ‘Allocated Property 1 and 2’) after their membership term ends. Mr O paid for their Fractional Club membership by taking the following amount of finance from the Lender: • £13,349 on 14 October 2016 (‘Credit Agreement 1’) • £18,832 on 19 April 2017 which included consolidation of the amount outstanding balance on the first loan (‘Credit Agreement 2’) Mr O – using a professional representative (the ‘PR’) – wrote to the Lender on 8 July 2022 in respect of each credit agreement (the ‘Letters of Complaint’) to raise a number of different concerns. As those concerns haven’t changed since they were first raised, and as both sides are familiar with them, it isn’t necessary to repeat them in detail here beyond the summary above. The Lender dealt with Mr O’s concerns as a complaint and issued a final response letter in respect of each complaint on 27July 2022, rejecting them on every ground. Mr O then referred the complaint to the Financial Ombudsman Service. It was assessed by an Investigator who, having considered the information on file, upheld the complaint on its merits. The Investigator thought that the Supplier had marketed and sold Fractional Club membership as an investment to Mr O and Mrs O at the Times of Sale in breach of Regulation 14(3) of the Timeshare Regulations. And given the impact of that breach on their purchasing decisions, the Investigator concluded that the credit relationships between the

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Lender and Mr O was rendered unfair to him for the purposes of section 140A of the CCA. The Lender disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision and it was passed to me. I came to a different outcome to the Investigator, as I didn’t think the complaint should be upheld. I issued a provisional decision (‘PD’) explaining why the findings from which are set out below. “I have considered all the available evidence and arguments to decide what is fair and reasonable in the circumstances of this complaint. And having done that, I do not currently think this complaint should be upheld. However, before I explain why, I want to make it clear that my role as an Ombudsman is not to address every single point that has been made to date. Instead, it is to decide what is fair and reasonable in the circumstances of this complaint. So, if I have not commented on, or referred to, something that either party has said, that does not mean I have not considered it. Section 75 of the CCA: the Supplier’s misrepresentations at the Times of Sale The CCA introduced a regime of connected lender liability under section 75 that affords consumers (“debtors”) a right of recourse against lenders that provide the finance for the acquisition of goods or services from third-party merchants (“suppliers”) in the event that there is an actionable misrepresentation and/or breach of contract by the supplier. Certain conditions must be met if the protection afforded to consumers is engaged, including, for instance, the cash price of the purchase and the nature of the arrangements between the parties involved in the transaction. The Lender doesn’t dispute that the relevant conditions are met. But for reasons I’ll come on to below, it isn’t necessary to make any formal findings on them here. It was said in the Letter of Complaint that Fractional Club membership had been misrepresented by the Supplier at the Times of Sale because Mr O (and Mrs O) were: 1. Told that they had purchased an investment that would “considerably appreciate in value”. 2. Promised a considerable return on their investment because they were told that they would own a share in a property that would considerably increase in value. 3. Told that they could sell their Fractional Club membership to the Supplier or easily to third parties at a profit. 4. Made to believe that they would have access to “the holiday apartment” at any time all year round. However, neither points 1 nor 2 strike me as misrepresentations even if such representations had been made by the Supplier (which I make no formal finding on). Telling prospective members that they were investing their money because they were buying a fraction or share of one of the Supplier’s properties was not untrue. And even if the Supplier’s sales representatives went further and suggested that the share in question would increase in value, perhaps considerably so, that sounds like nothing more than a honestly held opinion as there isn’t any accompanying evidence to persuade me that the relevant sales representative(s) said something that, while an opinion, amounted to a statement of fact that they did not hold or could not have reasonably held. As for points 3 and 4, while it’s possible that Fractional Club membership was misrepresented at the Time of Sale for one or both of those reasons, I don’t think it’s probable. They’re given little to none of the colour or context necessary to demonstrating that the Supplier made false statements of existing fact and/or opinion. And as there isn’t

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any other evidence on file to support the suggestion that Fractional Club membership was misrepresented for these reasons, I don’t think it was. So, while I recognise that Mr O and the PR have concerns about the way in which Fractional Club membership was sold by the Supplier, when looking at the claim under Section 75 of the CCA, I can only consider whether there was a factual and material misrepresentation by the Supplier. For the reasons I’ve set out above, I’m not persuaded that there was. And that means that I don’t think that the Lender acted unreasonably or unfairly when it dealt with this particular Section 75 claim. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? I’ve already explained why I’m not persuaded that Fractional Club membership was actionably misrepresented by the Supplier at the Times of Sale. But there are other aspects of the sales processes that, being the subject of dissatisfaction, I must explore with Section 140A in mind if I’m to consider this complaint in full – which is what I’ve done next. Having considered the entirety of the credit relationships between Mr O and the Lender along with all of the circumstances of the complaint, I don’t think the credit relationships between them were likely to have been rendered unfair for the purposes of Section 140A. When coming to that conclusion, and in carrying out my analysis, I have looked at: 1. The standard of the Supplier’s commercial conduct – which includes its sales and marketing practices at the Time of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Time of Sale, including the contractual documentation and disclaimers made by the Supplier; 3. The commission arrangements between the Lender and the Supplier at the Times of Sale and the disclosure of those arrangements; 4. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; 5. The inherent probabilities of the sale given its circumstances; and, when relevant 6. Any existing unfairness from a related credit agreement. I have then considered the impact of these on the fairness of the credit relationship between Mr O and the Lender. The Supplier’s sales & marketing practices at the Times of Sale Mr O’s complaint about the Lender being party to unfair credit relationships was made for several reasons. The PR says, for instance, that the right checks weren’t carried out before the Lender lent to Mr O. I haven’t seen anything to persuade me that was the case in this complaint given its circumstances. But even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied that the money lent to Mr O was actually unaffordable before also concluding that they lost out as a result and then consider whether the credit relationships with the Lender was unfair to them for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr O. Connected to this is the suggestion by the PR that the Credit Agreements were arranged by an unauthorised credit broker, the upshot of which is to suggest that the Lender wasn’t permitted to enforce the Credit Agreements. However, it looks to me like Mr O knew, amongst other things, how much he was borrowing and repaying each month, who he was borrowing from and that he was borrowing money to pay for Fractional Club membership.

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And as none of the lending looks like it was unaffordable for him, even if the one or more of the Credit Agreements were arranged by a broker that didn’t have the necessary permission to do so (which I make no formal finding on), I can’t see why that led to Mr O suffering a financial loss – such that I can say that the credit relationships in question was unfair on him as a result. And with that being the case, I’m not persuaded that it would be fair or reasonable to tell the Lender to compensate him, even if the loans weren’t arranged properly. The PR also says that there was one or more unfair contract terms in the Purchase Agreements. But as I can’t see that any such terms were operated unfairly against Mr O in practice, nor that any such terms led him and Mrs O to behave in a certain way to their detriment, I’m not persuaded that any of the terms governing Fractional Club membership are likely to have led to an unfairness that warrants a remedy. Overall, therefore, I don’t think that Mr O’s credit relationships with the Lender was rendered unfair to him under Section 140A for any of the reasons above. But there is another reason, perhaps the main reason, why the PR says the credit relationships with the Lender was unfair to them. And that’s the suggestion that Fractional Club membership was marketed and sold to him and Mrs O as an investment in breach of prohibition against selling timeshares in that way. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations Shares in the Allocated Properties clearly constituted investments as they offered Mr O (and Mrs O) the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But it is important to note at this stage that the fact that Fractional Club membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se. In other words, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. To conclude, therefore, that Fractional Club membership was marketed or sold to Mr O (and Mrs O) as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to them as an investment, i.e. told them or led them to believe that Fractional Club membership offered them the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Times of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations. On the one hand, it is clear that the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Mr O and Mrs O, the financial value of their share in the net sales proceeds of the Allocated Properties along with the investment considerations, risks and rewards attached to them. On the other hand, I acknowledge that the Supplier’s sales process left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s equally possible that Fractional Club membership was

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marketed and sold to Mr O and Mrs O as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Would the credit relationships between the Lender and Mr O have been rendered unfair to him had there been a breach of Regulation 14(3) of the Timeshare Regulations? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Times of Sale, I now need to consider what impact such breaches had on the fairness of the credit relationships between Mr O and the Lender under the Credit Agreements and related Purchase Agreements as the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. Indeed, it seems to me that, if I am to conclude that a breach of Regulation 14(3) led to credit relationships between Mr O and the Lender that were unfair to him and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led him and Mrs O to enter into the Purchase Agreements and the Credit Agreements is an important consideration. In his witness testimony Mr O states: “At the beginning of the sale process, I explained that we were not interested in holiday- resort timeshare purchase, as we would usually take holidays in various places, mainly city-breaks and not in holiday resorts. We also explained that we did not foresee going on holiday every year to a CLC property. At that point, CLC officials explained that the purchase was different from what time-share used to be. They explained that in their case, we would be purchasing actual share of ownership of the property. For the duration of the investment, we would enjoy holidays if we wished and at the end of the contract, when the property is sold, we would get our money back plus returns. So they explained that we would be buying a share that was valuable both for holidays as well as for the value at the end, when the property would be sold or transferred. It was projected as a win-win in every way.” And for the second purchase in 2017 Mr O said: “We attended and were taken on tour of higher grade apartments explained as more exclusive and more valuable holiday apartments. We were invited to and we decided to increase our investment stake in 2017 because of the promise of even better final returns when the property is sold, at the end. Upgrade was because of offer of better holiday- apartments, and that the higher grade properties would fetch higher returns when sold at the end of the investment period.” This evidence suggests that Mr O and Mrs O were motivated to purchase fractional points in 2016 and 2017 because of the possible gain they might make when the memberships came to an end. However, this testimony is dated 16 July 2024 – some seven years after the last sale in 2017. Experience tells me that, the more time that passes between a complaint and the event

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complained about, the more risk there is of recollections being vague, inaccurate and/or influenced by discussion with others. And this brings into question the weight I should attach to his testimony. Moreover, Mr O has provided this after the judgment in R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin) (Shawbrook v FOS was handed down. And when assessing testimony, one of the things I need to consider is when it was written, and whether it may have been affected by external factors, such as the widespread publication of the outcome of that case. There is a clear risk that Mr O’s testimony has been coloured by the outcome of Shawbrook v FOS and this affects the weight that I can give it and in the circumstances I don’t think I can give it the weight I need to find that Fractional Club membership was sold to Mr O as an investment. I am reinforced in that view by Mr O’s statement that the sales presentation was very high pressure and they were told they had to make a decision the same day. This isn’t supported by the evidence I have seen which shows that he didn’t sign the purchase agreements and credit agreements until some days after the presentations – in the case of the 2017 sale this was after he had returned from holiday. I have also seen the Supplier’s sale note for the 2016 sale, which says: “Had their sales presentation on Monday but need to speak to their friends who are owners before committing. Offered same deal as their friends and very happy to proceed.” In his testimony Mr O says: “(The Supplier) was introduced to me by a close friend in Aberdeen who explained that he would like to introduce me to a holiday resort where we could take discounted holiday.” It is reasonable to assume that the reference in the sales note about speaking to friends is to this person and there is nothing to suggest such discussion would have been about anything more than about the holidays - given Mr O doesn’t suggest his friend introduced the Supplier as offering anything other than discounted holidays or suggested that this was also an investment opportunity. This doesn’t suggest to me that the investment element of Fractional Club membership was a motivating reason for Mr O to go ahead with the purchase in 2016. That doesn’t mean they weren’t interested in a share in the Allocated Properties. After all, that wouldn’t be surprising given the nature of the product at the centre of this complaint. But as Mr O himself doesn’t persuade me that their purchases were motivated by their shares in the Allocated Properties and the possibility of a profit, I don’t think breaches of Regulation 14(3) by the Supplier were likely to have been material to the decisions they ultimately made. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr O’s and Mrs O’s decisions to purchase Fractional Club membership at the Times of Sale were motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests they would have pressed ahead with their purchases whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationships between Mr O and the Lender were unfair to him even if the Supplier had breached Regulation 14(3).”

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I concluded, given the facts and circumstances of this complaint, that the Lender hadn’t acted unfairly or unreasonably when it dealt with Mr O’s Section 75 claim(s) and I wasn’t persuaded that the Lender was party to a credit relationship with him under the Credit Agreements and related Purchase Agreements that was unfair to him for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate him. I gave both parties the opportunity of responding and providing any further information they wanted me to consider before making my final decision. The Lender responded and agreed with the PD. The PR also responded but didn’t agree with the PD and provided some further information they wish to be considered. Having received the relevant responses from both parties, I’m now finalising my decision. The legal and regulatory context In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is, in many ways. no different to that shared in several hundred published ombudsman decisions on very similar complaints – which can be found on the Financial Ombudsman Service’s website. And with that being the case, it is not necessary to set out that context in detail here. But I would add that the following regulatory rules/guidance are also relevant: The Consumer Credit Sourcebook (‘CONC’) – Found in the Financial Conduct Authority’s (the ‘FCA’) Handbook of Rules and Guidance Below are the most relevant provisions and/or guidance as they were at the relevant time: • CONC 3.7.3 [R] • CONC 4.5.3 [R] • CONC 4.5.2 [G] The FCA’s Principles The rules on consumer credit sit alongside the wider obligations of firms, such as the Principles for Businesses (‘PRIN’). Set out below are those that are most relevant to this complaint: • Principle 6 • Principle 7 • Principle 8 What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Following the responses from both parties, I’ve considered the case afresh and having done so, I’ve reached the same decision as that which I outlined in my provisional findings, for broadly the same reasons. The PR has provided no new information or evidence that would lead me to change the findings I made, which for the avoidance of doubt form part of the

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findings in this final decision unless I state to the contrary. Again, my role as an Ombudsman isn’t to address every single point which has been made to date, but to decide what is fair and reasonable in the circumstances of this complaint. If I haven’t commented on, or referred to, something that either party has said, this doesn’t mean I haven’t considered it. Rather, I’ve focused here on addressing what I consider to be the key issues in deciding this complaint and explaining the reasons for reaching my final decision. The PR’s further comments in response to the PD in the main relate to the issue of whether the credit relationship between Mr O and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to him as an investment at the Time of Sale. They’ve also now argued for the first time that the commission arrangements between the Supplier and Lender rendered the credit relationship between Mr O and the Lender unfair. As outlined in my PD, the PR originally raised various other points of complaint, all of which I addressed at that time. But they didn’t make any further comments in relation to those in their response to my PD. Indeed, they haven’t said they disagree with any of my provisional conclusions in relation to those other points. And since I haven’t been provided with anything more in relation to those other points by either party, I see no reason to change my conclusions in relation to them as set out in my PD. So, I’ll focus here on the PR’s points raised in response. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? The Supplier’s alleged breach of Regulation 14(3) of the Timeshare regulations I explained in the PD why I wasn’t persuaded by what Mr O said that he had purchased Fractional Club membership because it was an investment. The PR disagrees with my findings on this but has provided no new evidence and simply relies on what Mr O said in his testimony, which was considered by me before I issued the PD. The PR explained in their response to my PD that they hadn’t shared the Investigator’s view on this complaint with Mr O, saying “this was done in order not to influence their recollections”. The PR says that because of this it isn’t possible that Mr O’s recollections have been influenced by the Investigator’s opinion. This is something the PR has argued in several cases but it isn’t relevant here as the testimony was provided before the Investigator gave his opinion and he upheld the complaint in any event. The PR has also said it isn’t possible that Mr O’s testimony has been influenced by the outcome of Shawbrook & BPF v FOS but hasn’t provided any reasonable explanation why. Part of my assessment of the testimony was to consider when it was written, and whether it may have been affected by external factors such as the widespread publication of the outcome of Shawbrook and BPF v FOS. I have thought about what the PR has said, but on balance, I don’t find it a credible – the suggestion that Mr O wouldn’t have been able to understand the outcome isn’t credible in my view. So, I maintain that there is a risk that Mr O’s testimony was coloured by the outcome in Shawbrook & BPF v FOS. I said in the PD that I didn’t think I could place the weight I needed on what Mr O said because of this and that I was reinforced in that view by certain statements he had made in his testimony - such as what he had said about being subjected to high pressure sales and being told they had to make a decision the same day. I pointed out that this wasn’t consistent with him having signed the Purchase Agreements and Credit Agreements some

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days later. The PR hasn’t provided any reason why what Mr O said isn’t on the face of it consistent with what actually happened. In my view this brings into question the credibility of Mr O’s overall testimony and supports a conclusion that his testimony has been coloured by the judgment in Shawbrook & BPF v FOS and that I should give what he has said little weight because of this. The PR also argues that the introduction by a friend to Fractional Club membership for ‘discounted holidays’ should not diminish the significance of what was discussed during the actual sales presentation. But the point I was making about this was that Mr O wanted to discuss the purchase before going ahead and there was nothing to suggest that any such discussion was about purchasing membership because it was an investment given that wasn’t why the friend had introduced him to the Supplier. So, ultimately, for the above reasons, along with those I already explained in my PD, I remain unpersuaded that any breach of Regulation 14(3) was material to Mr O’s purchasing decisions. The PR also said that in the judgment handed down in Shawbrook & BPF v FOS, it was not challenged that the product in question was marketed and sold as an investment. But, as I explained in my provisional decision, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. And the judgment referred to did not make a blanket finding that all such products were mis-sold in the way the PR appears to be suggesting. Any complaint needs to be considered in the light of its specific circumstances. So, as I said before, even if the Supplier had marketed or sold the membership as an investment in breach of Regulation 14(3) (which I still make no finding on here), I’m not persuaded Mr O’s decision to make the purchases was motivated by the prospect of a financial gain. So, I still don’t think the credit relationship between Mr O and the Lender was unfair to him for this reason. The provision of information by the Supplier at the Time of Sale In response to the PD the PR raised a new argument, namely that a payment of commission from the Lender to the Supplier at the Time of Sale should lead me to uphold this complaint because, simply put, information in relation to that payment went undisclosed at the Time of Sale. I explained in my PD that in deciding whether there was an unfair credit relationship one of the things I had considered was the commission arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements. I set out below in more detail why I am not satisfied that the commission arrangements between the Lender and Supplier did lead to an unfair credit relationship between Mr O and the Lender. As both sides already know, the Supreme Court handed down an important judgment on 1 August 2025 in a series of cases concerned with the issue of commission: Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd [2025] UKSC 33 (‘Hopcraft, Johnson and Wrench’). The Supreme Court ruled that, in each of the three cases, the commission payments made to car dealers by lenders were legal, as claims for the tort of bribery, or the dishonest assistance of a breach of fiduciary duty, had to be predicated on the car dealer owing a fiduciary duty to the consumer, which the car dealers did not owe. A “disinterested duty”, as described in Wood v Commercial First Business Ltd & ors and Business Mortgage Finance 4 plc v Pengelly [2021] EWCA Civ 471, is not enough.

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However, the Supreme Court held that the credit relationship between the lender and Mr Johnson was unfair under Section 140A of the CCA because of the commission paid by the lender to the car dealer. The main reasons for coming to that conclusion included, amongst other things, the following factors: 1. The size of the commission (as a percentage of the total charge for credit). In Mr Johnson’s case it was 55%. This was “so high” and “a powerful indication that the relationship…was unfair” (see paragraph 327); 2. The failure to disclose the commission; and 3. The concealment of the commercial tie between the car dealer and the lender. The Supreme Court also confirmed that the following factors, in what was a non-exhaustive list, will normally be relevant when assessing whether a credit relationship was/is unfair under Section 140A of the CCA: 1. The size of the commission as a proportion of the charge for credit; 2. The way in which commission is calculated (a discretionary commission arrangement, for example, may lead to higher interest rates); 3. The characteristics of the consumer; 4. The extent of any disclosure and the manner of that disclosure (which, insofar as Section 56 of the CCA is engaged, includes any disclosure by a supplier when acting as a broker); and 5. Compliance with the regulatory rules. From my reading of the Supreme Court’s judgment in Hopcraft, Johnson and Wrench, it sets out principles which apply to credit brokers other than car dealer–credit brokers. So, when considering allegations of undisclosed payments of commission like the one in this complaint, Hopcraft, Johnson and Wrench is relevant law that I’m required to consider under Rule 3.6.4 of the Financial Conduct Authority’s Dispute Resolution Rules (‘DISP’). But I don’t think Hopcraft, Johnson and Wrench assists Mr O in arguing that his credit relationship with the Lender was unfair to him for reasons relating to commission given the facts and circumstances of this complaint. I haven’t seen anything to suggest that the Lender and Supplier were tied to one another contractually or commercially in a way that wasn’t properly disclosed to Mr O nor have I seen anything that persuades me that the commission arrangement between them gave the Supplier a choice over the interest rate that led Mr O Into a credit agreement that cost disproportionately more than it otherwise could have. I acknowledge that it’s possible that the Lender and the Supplier failed to follow the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them. But as I’ve said before, the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. And with that being the case, it isn’t necessary to make a formal finding on that because, even if the Lender and the Supplier failed to follow the relevant regulatory guidance at the Time of Sale, it is for the reasons set out below that I don’t currently think any such failure is itself a reason to find the credit relationship in question unfair to Mr O. From the information provided by the Lender the commission paid by it to the Supplier for arranging Credit Agreement 1 would have been no more than 2.48% of the amount

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advanced and for Credit Agreement 2 no more than 0.91% of the amount advanced. This is in stark contrast to the facts in Mr Johnson’s case. So, had Mr O known at the Times of Sale that the Supplier was going to be paid a flat rate of commission at those levels, I’m not currently persuaded that he either wouldn’t have understood that or would have otherwise questioned the size of the payment at that time. After all, Mr O wanted Fractional Club membership and had no obvious means of his own to pay for it. And at such a low level, the impact of commission on the cost of the credit he needed for a timeshare he and Mrs O wanted doesn’t strike me as disproportionate. So, I think he would still have taken out the loans to fund their purchases at the Times of Sale had the amount of commission been disclosed. What’s more, based on what I’ve seen so far, the Supplier’s role as a credit broker wasn’t a separate service and distinct from its role as the seller of timeshares. It was simply a means to an end in the Supplier’s overall pursuit of a successful timeshare sale. I can’t see that the Supplier gave an undertaking – either expressly or impliedly – to put to one side its commercial interests in pursuit of that goal when arranging the Credit Agreement. And as it wasn’t acting as an agent of Mr O and Mrs O but as the supplier of contractual rights they obtained under the Purchase Agreement, the transaction doesn’t strike me as one with features that suggest the Supplier had an obligation of ‘loyalty’ to Mr O when arranging the Credit Agreements and thus a fiduciary duty. Overall, therefore, I’m not persuaded that the commission arrangements between the Supplier and the Lender were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to Mr O. Section 140A: Conclusion Given all of the factors I’ve looked at in this part of my decision, and having taken all of them into account, I’m not persuaded that the credit relationship between Mr O and the Lender under the Credit Agreements and related Purchase Agreements was unfair to him. So, I don’t think it is fair or reasonable that I uphold this complaint on that basis Commission: The Alternative Grounds of Complaint While I’ve found that Mr O’s credit relationship with the Lender wasn’t unfair to him for reasons relating to the commission arrangements between it and the Supplier, two of the grounds on which I came to that conclusion also constitute separate and freestanding complaints to Mr O’s complaint about an unfair credit relationship. So, for completeness, I’ve considered those grounds on that basis here. The first ground relates to whether the Lender is liable for the dishonest assistance of a breach of fiduciary duty by the Supplier because it took a payment of commission from the Lender without telling Mr O (i.e., secretly). And the second relates to the Lender’s compliance with the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them. However, for the reasons I set out above, I’m not persuaded that the Supplier – when acting as credit broker – owed Mr O a fiduciary duty. So, the remedies that might be available at law in relation to the payment of secret commission aren’t, in my view, available to him. And while it’s possible that the Lender failed to follow the regulatory guidance in place at the Times of Sale insofar as it was relevant to disclosing the commission arrangements between it and the Supplier, I don’t think any such failure on the Lender’s part is itself a reason to uphold this complaint because, for the reasons I also set out above, I think Mr O would still have taken out the loans to fund the purchases at the Times of Sale had there been more adequate disclosure of the commission arrangements that applied at that time.

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Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that the Lender acted unfairly or unreasonably when it dealt with Mr O’s Section 75 claims and I am not persuaded that the Lender was party to a credit relationship with Mr O under the Credit Agreements that was unfair to him for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate him. My final decision I don’t uphold this complaint for the reasons set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask X to accept or reject my decision before 28 April 2026. Philip Gibbons Ombudsman

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