Shawbrook Bank Limited · DRN-6260522

The complaint Mr and Mrs W’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) acted unfairly and unreasonably by being party to an unfair credit relationship with them under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’). What happened Mr and Mrs W were trial members of a timeshare provider (the ‘Supplier’). But the product at the centre of this complaint is their membership of a timeshare that I’ll call the ‘Fractional Club’ – which they bought on 24 July 2014 (the ‘Time of Sale’). After trading in their trial membership, they paid £15,844 for 1,010 fractional points (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mr and Mrs W more than just holiday rights. It also included a share in the net sale proceeds of a property named on the Purchase Agreement (the ‘Allocated Property’) after the end of their membership term. Mr and Mrs W paid for their Fractional Club membership by taking finance of £19,739 from the Lender (the ‘Credit Agreement’). The amount borrowed exceeded the purchase price as they consolidated the finance taken to fund their trial membership into this loan. Mr and Mrs W – using a professional representative (the ‘PR’) – wrote to the Lender on 13 March 2024 (the ‘Letter 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 and Mrs W’s concerns as a complaint and issued its final response letter on 14 May 2024, rejecting it on every ground. The complaint was then referred 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 Lender disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me. I considered the matter and issued a provisional decision (the ‘PD’) dated 13 March 2026. In that decision, I said: “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

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has said, that does not mean I have not considered it. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? Having considered the entirety of the credit relationship between Mr and Mrs W and the Lender along with all the circumstances of the complaint, I don’t think the credit relationship between them was likely to have been rendered unfair for the purposes of Section 140A. When coming to that conclusion, and in carrying out my analysis, I have looked at: 1. The standard of the Supplier’s commercial conduct – which includes its sales and marketing practices at the Time of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Time of Sale, including the contractual documentation and disclaimers made by the Supplier; 3. The commission arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements; 4. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; 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 and Mrs W and the Lender. The Supplier’s sales & marketing practices at the Time of Sale Mr and Mrs W’s complaint about the Lender being party to an unfair credit relationship was made for several reasons. The PR says Mr and Mrs W were told that they would have no issues with booking holidays wherever they liked through their membership, but in reality, they could only travel to two destinations, with limited availability. However, the Supplier has provided evidence to show that Mr and Mrs W did not attempt to book any holidays through their membership. So, I don’t think any unfairness with availability, if it did indeed exist, is likely to warrant a remedy. I acknowledge that Mr and Mrs W may have felt weary after a sales process that went on for a long time. But they say little about what was said and/or done by the Supplier during their sales presentation that made them feel as if they had no choice but to purchase Fractional Club membership when they simply did not want to. They were also given a 14-day cooling-off period and have not provided a credible explanation for why they did not cancel their membership during that time. And with all that being the case, there is insufficient evidence to demonstrate that Mr and Mrs W made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. Overall, therefore, I don’t think that Mr and Mrs W’s credit relationship with the Lender was rendered unfair to them under Section 140A for the reasons above. But there is another reason, perhaps the main reason, why the PR says the credit relationship with the Lender was unfair to them. And that’s the suggestion that

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Fractional Club membership was marketed and sold to them as an investment in breach of a prohibition against selling timeshares in that way. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations The Lender does not dispute, and I am satisfied, that Mr and Mrs W’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. This is what the provision said at the Time of Sale: “A trader must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment if the proposed contract would be a regulated contract.” But the PR says that the Supplier did exactly that at the Time of Sale. The term “investment” is not defined in the Timeshare Regulations. But for the purposes of this provisional decision, and by reference to the decided authorities, an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit. A share in the Allocated Property clearly constituted an investment as it offered Mr and Mrs W the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But it’s 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 and Mrs W 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 Time of Sale as an investment in breach of Regulation 14(3) of the Timeshare Regulations. On the one hand, it’s 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 and Mrs W, the financial value of their share in the net sales proceeds of their allocated property along with the investment considerations, risks and rewards attached to it. 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

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membership as an investment. So, I accept that it’s also possible that Fractional Club membership was marketed and sold to Mr and Mrs W as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Was the credit relationship between the Lender and Mr and Mrs W rendered unfair? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I now need to consider what impact that breach had on the fairness of the credit relationship between Mr and Mrs W and the Lender under the Credit Agreement and related Purchase Agreement as the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. Indeed, it seems to me that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr and Mrs W and the Lender that was unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led them to enter into the Purchase Agreement and the Credit Agreement is an important consideration. The PR has provided a statement from Mr W dated 13 March 2024 containing his recollections of his and his wife’s interactions with the Supplier: Amongst other things, this says: “1. Circa 2014 we received a letter from [the Supplier] inviting us to a presentation to discover the benefits of being a [Supplier] member where if we attended, we would be entitled to a free one-week holiday in Spain Costa Del Sol. We agreed to the terms. 2. When we arrived in Spain to commence our free holiday we were immediately approached and asked to attend the presentation that we had agreed to. We were told that the presentation would be about one hour, which actually took two to three hours. My wife had just had [an accident] and we were very much in need of a holiday to recuperate and settle our minds as we were in a fragile state. Mrs [W’s] condition as a result of the accident feels better in warmer clients and having been pitched by the [Supplier] representative that we could holiday in Spain during the English winter period for four or so months of the year was appealing to us. Looking back at the situation we would consider both my wife and I quite vulnerable. Looking back we now view the sales pitch as clever, manipulative high-pressure. 3. It was explained at the sales presentation about the benefits of becoming a Fractional Timeshare Owner (FTO) and we were told; a. That FTO was a very good investment and something for the family, as we were buying property that would be sold at a pre- designated date in the future which I remember being circa 15-19 years’ time; b. That we could holiday anywhere in the world at dates and resorts of our choosing with no problem; c. We could simply sell our investment property at any time ahead of

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the proposed sale date in 15-19 years’ time if we wanted to, by simply ringing [the Supplier] and they would sell it for us; d. There would be no problem selling and [the Supplier] would sell it at a profit, as prices were almost guaranteed to go up. We were not told how much profit we would make but we were assured that their [sic] definitely would be a profit; e. If the property by some chance did not sell [the Supplier] would buy it back from us; f. We could rent the property out through [the Supplier] or get other people to use it from our own efforts and these people could pay us directly for the use of the property which would provide us another income; g. That we were definitely not buying timeshare. I (Mr [W]) remember asking at least three times if this was a timeshare product and I was repeatedly assured that it was not and was told it is a property, bricks and mortar purchase. I was concerned about timeshare as I am suspicious about timeshare, but the salesperson was adamant as to what we were buying, so I relied on the salesperson’s assurances. h. We were presented with illustrations that the salesperson wrote down on paper, demonstrating how we would make a profit from our property purchase […] i. Maintenance Fees would be very small and fixed at £300-400 per year. […] 5. We were in a nice resort and so far [the Supplier] had done what they said they would do, this being provide us [sic] with a free one week’s holiday, we were recovering from Mrs [W’s] accident and the idea of having an investment property that we would use during the winter and one that we could sell at any time really appealed to us, so we agreed to purchase FTO. 6. The reality was that we could never get availability. To this day we have been unable to use the FTO due to availability problems. 7. The Maintenance Fees when they came through were twice the amount, we were told that they would be, being £7-800 per year. We paid the maintenance fees for some 2-3 years and due to not being able to get any holidays and the cost of the maintenance fees we stopped paying these costs on advice from a third party. 8. We were concerned about the situation we were in and decided to sell the property as we had been told we could, so we wrote a letter to [the Supplier] where our reasons for the sale were a deliberate falsehood. I did not want to write a letter that detailed all of the lies we had been told and the problems we were experiencing as we thought it may upset [the Supplier] and they would either drag their heals [sic] in selling the property or may not sell it at all, leaving us in a very difficult position. We wrote a letter that although was untrue and concealed our true feelings and experiences, we felt it would provide us the best chance in getting the property sold by citing our ill health whilst not criticising [the Supplier]. […]” But it was only 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 & BPF v FOS’) was handed down, that Mr W recalled that the Supplier led him and his wife to believe that Fractional Club membership offered them the prospect of a financial gain. And experience tells me

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that the more time that passes between a complaint and the event complained about, the more risk there is of recollections being vague, inaccurate and/or influenced by discussion with others. Mr W’s statement was written around ten years after the Time of Sale and contains several inconsistencies when compared with the available evidence. For example, Mr W’s recollections of how he and his wife first came into contact with the Supplier is inaccurate. Mr and Mrs W were selected to receive a discounted weekend away in the UK, where they purchased a trial membership from the Supplier – costing several thousand pounds – with finance from a different lender. This trial membership offered five weeks of holiday accommodation as well as a prelude holiday – and it was on the latter that Mr and Mrs W purchased the Fractional Club membership. There is no mention of the trial membership in Mr W’s statement. At paragraph 6, Mr W says he and his wife were unable to use their Fractional Club membership due to availability issues. But the Supplier’s records show that Mr and Mrs W never requested to reserve any holidays using their membership. In fact, the Supplier’s notes show that it contacted Mr W in August 2014 to encourage him and his wife to take the bonus week’s holiday offered as part of it, but he was unable to commit to a date. Although Mr W did write to the Supplier to request that it resell his and his wife’s membership as set out at paragraph 8 of his statement, there is no suggestion in this correspondence that he was expecting a profit from doing so, bearing in mind he says he was assured there “definitely” would be one at the Time of Sale. I also find it surprising that it does not appear Mr and Mrs W contacted the Supplier to query that their maintenance fees were in fact several hundred pounds more per year than Mr W says they were led to believe. As there isn’t any other evidence on file to corroborate Mr W’s recent evidence about his and his wife’s motivations at the Time of Sale, there seems to me to be a very real risk that his recollections were coloured by the judgment in Shawbrook & BPF v FOS. And with that being the case, coupled with the inconsistencies in his account when compared with the available evidence, I’m not persuaded that I can give his written recollections the weight necessary to find that the credit relationship in question was unfair for reasons relating to a breach of the relevant prohibition. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr and Mrs W’s decision to purchase this at the Time of Sale was motivated by the prospect of a financial gain (i.e. a profit). And for that reason, I do not think the credit relationship between Mr and Mrs W and the Lender was unfair to them even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Time of Sale The PR says that Mr and Mrs W were not given sufficient information at the Time of Sale by the Supplier about the ongoing costs of Fractional Club membership. As I’ve already indicated, the case law on Section 140A makes it clear that it does not automatically follow that regulatory breaches create unfairness for the purposes of the unfair relationship provisions. The extent to which such failures render a credit relationship unfair must also be determined according to their impact on the complainant.

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I acknowledge that it is also possible that the Supplier did not give Mr and Mrs W sufficient information, in good time, on the various charges they could have been subject to as Fractional Club members in order to satisfy the requirements of Regulation 12 of the 2010 Timeshare Regulations (which was concerned with the provision of ‘key information’). But even if that was the case, I cannot see that the ongoing costs of membership were applied unfairly in practice. And as neither Mr and Mrs W nor the PR have persuaded me in this particular case that they would not have pressed ahead with their purchase had those details been disclosed by the Supplier in compliance with Regulation 12, I cannot see why any failings in that regard are likely to be material to the outcome of this complaint given its facts and circumstances.” In conclusion, I was not persuaded that the Lender was party to a credit relationship with Mr and Mrs W under the Credit Agreement that was unfair to them for the purposes of Section 140A of the CCA – nor did I see any other reason why it would be fair or reasonable to direct the Lender to compensate them. The Lender accepted the PD. The PR disagreed with the PD but did not provide any further comments or evidence for me to consider. I am now in a position to finalise 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 3.6.4 R 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

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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. As neither party has provided any further comments or evidence for me to consider, I see no reason to depart from the conclusions I reached in the PD. I therefore adopt the provisional findings I previously reached as my final decision. My final decision My final decision is to not uphold Mr and Mrs W’s complaint about Shawbrook Bank Limited for the reasons provided. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr and Mrs W to accept or reject my decision before 27 April 2026. Alex Salton Ombudsman

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