Clydesdale Financial Services Limited · DRN-6234616

The complaint Mr P’s complaint is, in essence, that Clydesdale Financial Services Limited trading as Barclays Partner Finance (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 a claim under Section 75 of the CCA. What happened Mr P was a member of a timeshare provider (the ‘Supplier’) – having purchased several products from it over time. But the product at the centre of this complaint is his membership of a timeshare that I’ll call the ‘Fractional Club’ – which he bought on 23 March 2016 (the ‘Time of Sale’). He entered into an agreement with the Supplier to buy one weekly period and one short break period at a cost of £21,950 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mr P more than just holiday rights. It also included a share in the net sale proceeds of a property named on the Purchase Agreement (the ‘Allocated Property’) after his membership term ends. Mr P paid for his Fractional Club membership by taking finance of £17,000 from the Lender (the ‘Credit Agreement’). Mr P – using a professional representative (the ‘PR’) – wrote to the Lender on 14 March 2023 (the ‘Letter of Complaint’) to raise several different concerns. Since then, the PR has raised some further matters it says are relevant to the outcome of this complaint1. As both sides are familiar with the concerns raised, it isn’t necessary to repeat them in detail here beyond the summary above. The complaint was then referred to the Financial Ombudsman Service after the Lender did not respond to it. 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 issued a provisional decision explaining why I was not planning to uphold this complaint. The Lender agreed with my provisional decision and said it had nothing to add. The PR disagreed on Mr P’s behalf. It provided some further comments and evidence for me to consider. The legal and regulatory context 1 One concern the PR raised was about undisclosed commission, but in this case no commission was paid by the Lender to the Supplier, and the PR has accepted its concerns in cases like this would not lead to the complaint being upheld. Another was that Fractional Club membership was an Unregulated Collective Investment Scheme, but the PR now accepts that it was not.

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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 no different to that shared in several hundred ombudsman decisions on very similar complaints. And with that being the case, it is not necessary to set it out here. 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. Having done so, I’ve reached the same decision as that which I outlined in my provisional findings – and for broadly the same reasons. A copy of my provisional findings is below. As such, I do not uphold this complaint. START OF COPY OF PROVISIONAL FINDINGS Section 75 of the CCA: the Supplier’s misrepresentations at the Time of Sale As a general rule, creditors can reasonably reject Section 75 claims that they are first informed about after the claim has become time-barred under the Limitation Act 1980 (the ‘LA’) as it wouldn’t be fair to expect creditors to look into such claims so long after the liability arose and after a limitation defence would be available in court. So, it is relevant to consider whether Mr P’s Section 75 claim for misrepresentation was time-barred under the LA before he put it to the Lender. As I mentioned above, a claim under Section 75 is a “like” claim against the creditor. It essentially mirrors the claim Mr P could make against the Supplier. A claim for misrepresentation against the Supplier would ordinarily be made under Section 2(1) of the Misrepresentation Act 1967. And the limitation period to make such a claim expires six years from the date on which the cause of action accrued (see Section 2 of the LA). But a claim, like the one in question here, under Section 75 is also ‘an action to recover any sum by virtue of any enactment’ under Section 9 of the LA. And the limitation period under that provision is also six years from the date on which the cause of action accrued. The date on which the cause of action accrued was the Time of Sale – 23 March 2016. I say this because Mr P entered the purchase of his timeshare at that time based on the alleged misrepresentations of the Supplier – which he says were relied upon. And as the loan from the Lender was used to help finance the purchase, it was when he entered into the Credit Agreement that he suffered a loss. Mr P first notified the Lender of his Section 75 claim on 14 March 2023. And as more than six years had passed between the Time of Sale and when that claim was first put to the Lender, I don’t think it was unfair or unreasonable of the Lender to reject Mr P’s concerns about the Supplier’s alleged misrepresentations.

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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 Time of Sale. But there are other aspects of the sales process that, being the subject of dissatisfaction, I must explore with Section 140A in mind if I’m to consider this complaint in full – which is what I’ve done next. Having considered the entirety of the credit relationship between Mr P 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. 6. Any existing unfairness from a related credit agreement2. I have then considered the impact of these on the fairness of the credit relationship between Mr P and the Lender. The Supplier’s sales & marketing practices at the Time of Sale Mr P’s complaint about the Lender being party to an unfair credit relationship was and is made for several reasons. They include allegations that: 1. Mr P was pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale. 2. The right checks weren’t carried out before the Lender lent to Mr P. 3. The loan interest was excessive. However, none of this strikes me as a reason why this complaint should succeed. I acknowledge that Mr P may have felt weary after a sales process that went on for a long time. But he says little about what was said and/or done by the Supplier during his sales presentation that made him feel as if he had no choice but to purchase Fractional Club membership when he simply did not want to. Mr P was also given a 14-day cooling off period 2 As defined under the CCA. There was no such credit agreement in this case – the Credit Agreement did not refinance or consolidate any other credit agreement.

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and he has not provided a credible explanation for why he did not cancel his membership during that time. And with all of that being the case, there is insufficient evidence to demonstrate that Mr P made the decision to purchase Fractional Club membership because his ability to exercise that choice was significantly impaired by pressure from the Supplier. I haven’t seen anything to persuade me that the right checks weren’t carried out by the Lender given this complaint’s circumstances. But even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied that the money lent to Mr P was actually unaffordable before also concluding that he lost out as a result and then consider whether the credit relationship with the Lender was unfair to him for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr P. Mr P was aware of the interest rate, which was set out on the face of the Credit Agreement, as well as the term of the loan and the monthly repayments. So, he understood what it was he was taking out. Further, I don’t think the rate of interest was excessive, compared either to other rates available from other point-of-sale lenders or on the open market, so I can’t say it would be fair or reasonable to tell the Lender to do anything because of this. Overall, therefore, I don’t think that Mr P’s credit relationship with the Lender was rendered unfair to him under Section 140A for any of the reasons above. But there is another reason why the PR says the credit relationship with the Lender was unfair to him. And that’s the suggestion that Fractional Club membership was marketed and sold to him as an investment in breach of the 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 P’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. This is what the provision said at the Time of Sale: “A trader must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment if the proposed contract would be a regulated contract.” But the PR and Mr P say that the Supplier did exactly that at the Time of Sale – saying, in summary, that he was told by the Supplier that Fractional Club membership was the type of investment that would only increase in value. 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.

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A share in the net sale proceeds of the Allocated Property could constitute an investment as it offered Mr P the prospect of a financial return – whether or not, like all investments, that was more than what he first put into it. But it is important to note at this stage that the fact that Fractional Club membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se.3 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 P as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to him as an investment, i.e. told him or led him to believe that Fractional Club membership offered him the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Time of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations. On the one hand, the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Mr P, the financial value of their share in the net sales proceeds of the Allocated Property along with the investment considerations, risks and rewards attached to them. On the other hand, the Supplier’s sales process potentially left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s possible that Fractional Club membership was marketed and sold to Mr P as an investment in breach of Regulation 14(3). However, whether 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 P 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 P 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 P and the Lender that was unfair to him and warranted relief 3 The PR has argued that Fractional Club membership amounted to an Unregulated Collective Investment Scheme, however this was considered and rejected in the judgment in R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin).

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as a result, it is important for me to consider whether the Supplier’s breach of Regulation 14(3) led him to enter into the Purchase Agreement and the Credit Agreement. On my reading of the evidence before me, the prospect of a financial gain from Fractional Club membership was not an important and motivating factor when Mr P decided to go ahead with his purchase. I say this for the following reasons: • Mr P’s statement, setting out his recollections, does not specifically describe what happened at the Time of Sale. It generally describes what he was told when he first purchased Fractional Club membership some years before the Time of Sale. • This says that “We were told that the benefit with the Fractional is that they would be sold after a period of time and as we would own part of the property we would receive part of the profit...” • My reading of this is that Mr P expected the Allocated Property to be sold and that he would receive his share of the net sale proceeds. He refers to that as “part of the profit”. This is not the same as Mr P saying he hoped or expected to make a financial gain or profit himself. • My reading of this is reinforced by what Mr P says later in the statement where he says, “We were told that the Fractionals could be sold and that we would receive a slice of the profit…” Again, this seems to be speaking of Mr P’s share of the net sale proceeds. It seems implausible that a “slice of the profit” is a reference to Mr P making a financial gain or profit himself, rather than his “slice” or share of the net sale proceeds. That doesn’t mean Mr P wasn’t interested in a share in the Allocated Property. After all, that wouldn’t be surprising given the nature of the product at the centre of this complaint. But as Mr P himself doesn’t persuade me that his purchase was motivated by his share in the Allocated Property and the possibility of a profit, I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision he ultimately made. On balance, therefore, even if the Supplier marketed or sold Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr P’s decision to purchase Fractional Club membership at the Time of Sale was motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests he would have pressed ahead with his purchase regardless of whether there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationship between Mr P and the Lender was unfair to him even if the Supplier did breach Regulation 14(3). The provision of information by the Supplier at the Time of Sale The PR says that Mr P was not given sufficient information at the Time of Sale by the Supplier about Fractional Club membership, including about the ongoing costs and the fact that Mr P’s heirs could inherit these costs. 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 mistakes 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 P sufficient information, in good time, on the various charges he could have been subject to as Fractional Club members in order to satisfy the requirements of Regulation 12 of the 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 P nor the PR have persuaded me that he would not have pressed ahead with his purchase had the finer details of the Fractional Club’s ongoing costs 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. Conclusion In conclusion, I do not think that the Lender acted unfairly or unreasonably when it dealt with the relevant Section 75 claim and I am not persuaded that the Lender was party to a credit relationship with Mr P under the Credit Agreement that was unfair to him for the purposes of Section 140A of the CCA – nor do I see any other reason why it would be fair or reasonable to direct the Lender to compensate him. END OF COPY OF PROVISIONAL FINDINGS The PR’s response to my provisional findings about an unfair relationship 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 provisional decision only relate to the issue of whether the credit relationship between Mr P and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Mr P as an investment at the Time of Sale and this was material to his decision to purchase it. As outlined in my provisional decision, the PR originally raised various other points of complaint, all of which I addressed at that time. But they didn’t make any further comments in relation to those in their response to my provisional decision. Indeed, they haven’t said they disagree with any of my provisional conclusions in relation to those other points. And since I haven’t been provided with anything more in relation to those other points by either party, I see no reason to change my conclusions in relation to them as set out in my provisional decision. So, I’ll focus here on the PR’s points raised in response. The PR has provided further comments and evidence which in my view relate to whether Fractional Club membership was marketed or sold as an investment in breach of the prohibition in Regulation 14(3) of the Timeshare Regulations. However, as I explained in my provisional decision, while the Supplier’s sales processes left open the possibility that the sales representative may have positioned Fractional Club membership as an investment, it isn’t necessary to make a finding on this as it is not determinative of the outcome of the complaint. I explained that Regulatory breaches do not automatically create unfairness and that such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. The PR’s comments and evidence in this respect do not persuade me that I should uphold Mr P’s complaint, because they do not make me think it’s any more likely that the Supplier’s

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breach of Regulation 14(3) (if there was one) led Mr P to enter into the Purchase Agreement and the Credit Agreement. The PR has provided evidence that Mr P rented out his weekly period and received income from this in 2019, 2020, 2023, 2024 and 2025. It also provided an email from Mr P dated 10 March 2026, which said: “This is to confirm that we still hold [Fractional Club membership] holiday suites. We were persuaded to purchase as they were sold as luxury suites for us to use as holiday apartments, or to let out at advantageous rentals and monetary return on completion of the contract period…” The PR argues that this, alongside a call note dated 3 March 2022 and provided to us in May 2025, show that Mr P has consistently said he purchased Fractional Club membership at the Time of Sale because it was marketed and sold to him as an investment. But Mr P only refers to receiving rental income and a monetary return at the end. He still has not made clear that he hoped or expected that to equate to a profit or that this motivated his purchase. In addition to this, the call note matches Mr P’s statement in that it says: “property would be sold at end of period + as owned part of property would get part of the profit… maintenance fees for different investment – fractional – in 2015/2016 still paying… 3 wks in [fractional club] – luxury apartments. Told fractionals can be sold + we receive profits but been told all shareholders have to agree sale. [The Supplier] large shareholder if they didn’t want to sell they could stop it.” For the same reasons as explained in my provisional decision about Mr P’s statement, I do not find this to be persuasive evidence that Mr P purchased at the Time of Sale because he was told Fractional Club membership was an investment (as defined above). He may have used the term investment when speaking to the PR, but where he has explained what he meant by that he seems to just describe getting his share of the net sale proceeds when the Allocated Property is sold – rather than making a financial gain or profit – and does not mention rental income at all. I accept that rental income could be seen as a return on investment. And if this was material to Mr P’s decision to purchase then that could lead me to conclude his relationship with the Lender was unfair as a result. But Mr P and the PR have not ever mentioned this previously – not in the call note, the Letter of Complaint or Mr P’s statement. And with that being the case, I am not persuaded by Mr P’s recent email and the PR’s response to my provisional decision that this was a material factor in his decision to purchase. The PR has provided its further thoughts as to Mr P’s likely motivations for purchasing Fractional Club membership. I recognise it has interpreted Mr P’s evidence differently to how I have and thinks it points to him having been motivated by the prospect of a financial gain from Fractional Club membership. And although I have carefully considered the PR’s arguments in response to this, I’m not persuaded the conclusions I reached on this point were unfair or unreasonable. So, ultimately, for the above reasons, along with those I already explained in my provisional decision, I remain unpersuaded that any breach of Regulation 14(3) was material to Mr P’s purchasing decision. And for that reason, I do not think the credit relationship between Mr P and the Lender was unfair to Mr P even if the Supplier had breached Regulation 14(3).

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Other points The PR said that I should consider the earlier sales of Fractional Club memberships. But Mr P’s statement and other evidence do not describe the Time of Sale (or any other) individually or in detail. For example, he has not said where the sale took place (or even when), who he spoke to, what was said etc. In short, the evidence, taken as a whole, does not persuade me that any breach of Regulation 14(3) of the Timeshare Regulations by the Supplier (if there was one) led Mr P to enter into the Purchase Agreement. Conclusion In conclusion, I do not think that the Lender acted unfairly or unreasonably when it dealt with the relevant Section 75 claims, and I am not persuaded that the Lender was party to a credit relationship with Mr P under the Credit Agreement that was unfair to him for the purposes of Section 140A of the CCA – nor do I see any other reason why it would be fair or reasonable to direct the Lender to compensate Mr P. My final decision For the reasons I’ve explained, I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr P to accept or reject my decision before 15 April 2026. Phillip Lai-Fang Ombudsman

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