Clydesdale Financial Services Limited · DRN-6231914

The complaint Mr R’s complaint is, in essence, that Clydesdale Financial Services Limited trading as Barclays Partner Finance (the ‘Lender’) acted unfairly and unreasonably by: 1. Deciding against paying a claim under Section 75 of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) (the ‘declined Section 75 claim’ complaint). 2. Lending to him irresponsibly (the ‘irresponsible lending’ complaint). 3. Providing a loan brokered by an unauthorised credit intermediary (the ‘unauthorised credit intermediary’ complaint). 4. Being party to an unfair credit relationship with him under Section 140A of the CCA (the ‘unfair credit relationship’ complaint). Background to the complaint Mr R and his wife Mrs R were members of a timeshare provider (the ‘Supplier’) – having purchased a number of products from it over time. But the product at the centre of this complaint is their membership of a timeshare that I’ll call the ‘Fractional Club’ – which they bought on 14 May 2013 (the ‘Time of Sale’). They entered into an agreement with the Supplier to buy a number of fractional points which, after trading in their existing membership, cost £9,999 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mr and Mrs R 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 their membership term ends. Mr and Mrs R paid for their Fractional Club membership by taking finance of £13,999 from the Lender (the ‘Credit Agreement’) in Mr R’s name, which also consolidated lending they had taken out to purchase their existing membership. He settled the Credit Agreement with the Lender on 1 April 2014. As Mr R was the only borrower named on the Credit Agreement, this complaint has been brought in his name only. Mr R – using a professional representative (the ‘PR’) – wrote to the Lender on 12 January 2024 (the ‘Letter of Complaint’) to raise a number of different concerns. As both sides are familiar with the concerns raised, it isn’t necessary to repeat them in detail here beyond the summary above. The Lender dealt with Mr R’s concerns as a complaint and issued its final response letter on 1 February 2024, rejecting it on every ground.

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The complaint was then referred to the Financial Ombudsman Service. It was assessed by an Investigator who, having considered the information on file, thought the service could not consider Mr R’s irresponsible lending and unfair credit relationship complaints because they had been made too late, and while the remainder of the complaint had been made in time, it should not be upheld. Mr R disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision. So the complaint was passed to me to decide. My provisional decision I recently issued a provisional decision (the ‘PD’) not upholding this complaint. I explained that given the facts and circumstances of this complaint, I did not think this Service had jurisdiction to consider Mr R’s irresponsible lending, unauthorised credit intermediary and unfair credit relationship complaints. And while I thought this Service had jurisdiction to consider his declined Section 75 claim complaint, I did not think the Lender acted unfairly or unreasonably by not upholding his claim. I gave both parties the opportunity to respond to the PD. The PR responded stating it had nothing further to add, and the Lender confirmed it accepted the PD. As I have not received any further submissions from either party, and have not been persuaded to depart from my provisional findings, I have repeated my provisional findings below, as my final decision, and have not therefore included any further detail of them in this background summary. 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. Having done that, I have concluded: • Mr R’s irresponsible lending, unauthorised credit intermediary and unfair credit relationship complaints cannot be considered by the Financial Ombudsman Service; and, • Mr R’s declined Section 75 claim complaint can be considered by the Financial Ombudsman Service, but it should be upheld. 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’s to decide what’s 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. In considering what’s fair and reasonable in all the circumstances of the complaint, I’m 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.

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The Financial Ombudsman Service’s jurisdiction We can’t consider all complaints brought to this service. Before we can consider a complaint, we need to check whether the complaint is one we have the power to look at. The limits of our power to consider a complaint are set out in the Rules under section two of the Dispute part (‘DISP’) of the Financial Conduct Authority’s (‘FCA’) Handbook. I’ve carefully considered these rules when deciding whether we can consider Mr R’s complaint. DISP 2.8.2 R sets out that: “The Ombudsman cannot consider a complaint if the complainant refers it to the Financial Ombudsman Service: … (2) more than: (a) six years after the event complained of; or (if later) (b) three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint; unless the complainant referred the complaint to the respondent or to the Ombudsman within that period and has a written acknowledgement or some other record of the complaint having been received; unless (3) in the view of the Ombudsman, the failure to comply with the time limits in DISP 2.8.2 R…was as a result of exceptional circumstances; or… (5) the respondent has consented to the Ombudsman considering the complaint where the time limits in DISP 2.8.2 R…have expired…” The Lender has not consented to us considering Mr R’s complaint. So, to be able to consider the complaint, it needs to have been made within these time limits, unless there were exceptional circumstances that prevented Mr R from complaining in time. Part A – the six year time limit Mr R’s complaint concerns a number of different activities of the Lender that took place at different times. So while he raised his concerns under one complaint, it’s necessary to consider first when the Lender undertook each activity separately. The Lender’s decision to decline Mr R’s Section 75 claim The alleged misrepresentations that form the grounds for Mr R’s claim under Section 75 of the CCA occurred at the Time of Sale on 14 May 2013. However, the activity of the Lender that Mr R has complained about is its handling of that claim.

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The Lender did not issue a response to Mr R's claim before he made his complaint. So for the purposes of DISP 2.8.2 R (2)(a), the event complained of here was still ongoing when Mr R complained about it. Clearly then this part of his complaint has been made in time, and is therefore within our jurisdiction to consider. The Lender’s decision to lend The Lender made the decision to lend to Mr R, having received his loan application via an allegedly unauthorised credit intermediary, on 14 May 2013. That’s more than six years before Mr R’s complaints about that, so these parts of his complaint were made outside the time limit at DISP 2.8.2 R (2)(a). The Lender’s participation in an unfair credit relationship The event complained of here is the allegation that the Lender participated in an unfair credit relationship with Mr R, and that while the relationship was ongoing, the Lender failed in its responsibilities to take the necessary steps to correct the situation. Mr R entered into the Credit Agreement with the Lender on 14 May 2013, and he settled the Credit Agreement on 1 April 2014. The Lender has provided us with a statement of account that shows the finance was fully repaid on that date. That means the credit relationship under that agreement started and ended on those dates respectively, and for the purposes of DISP 2.8.2 R (2)(a), the event complained of here took place on 1 April 2014. The PR has argued the credit relationship between Mr R and Lender did not end on that date because the statement of account does not say the account is closed. The PR suggests the Lender could go on to provide further advances to Mr R at any time within the original term of the Agreement, so the end date of the credit relationship between them should be taken to be the contractual end date of the Agreement, which is 14 May 2028. I have thought about what the PR has said but I don’t agree with its argument. From everything I have seen, the Credit Agreement in this case did not work in the way the PR appears to be suggesting, and I remain satisfied that the credit relationship between Mr R and the Lender ended when the loan was fully repaid. That was more than six years before Mr R’s complaint about that, so this part of his complaint was made outside the time limit at DISP 2.8.2 R (2)(a). Part B – the three year time limit The point at which Mr R ought to have become aware of a cause to make this complaint is when he had actual or constuctive knowledge of the problem he now complains about, that the problem may cause him a loss (or had already done so) and that the respondent (in this case, the Lender) may be responsible for causing it. Mr R made his complaint about the Lender’s participation in an unfair credit relationship with him because he says the Supplier breached Regulation 14(3) of the Timeshare Regulations when it sold Fractional Club membership to him. He also complained the Lender failed to carry out the right checks before it agreed to lend to him, and it agreed to provide a loan that was brokered by an allegedly unauthorised credit intermediary.

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In respect of Mr R’s concerns about the Lender failing to carry out the right checks before it agreed to lend to him, the essence of his allegation here is that the Lender lent to him irresponsibly because he could not afford it. I think that is something he would have realised before, or not long after, he fully repaid the loan on 1 April 2014. By then, he would have known: 1. There was a problem with the lending (he couldn’t afford it). 2. The problem had caused him a loss (he was paying interest on a loan he should not have been given). 3. Another party’s actions (or its failure to act) may have caused the loss and the other party may have been the Lender (it was the Lender’s decision to lend money to him when he could not afford it). Consequently, I consider that by the time Mr R settled the Credit Agreement with the Lender on 1 April 2014, or not long after, he ought reasonably to have become aware of a cause for complaint about the Lender’s decision to lend to him. That is more than three years before his complaint was made to the Lender, so this part of his complaint was made outside the time limit at DISP 2.8.2 R (2)(b). I do not think Mr R would have been aware, or ought reasonably to have been aware, of a cause for complaint about the Lender providing a loan brokered by an allegedly unauthorised credit intermediary until he contacted the PR. Indeed, the PR has said, albeit in relation to his unfair credit relationship complaint, that he only became aware of a cause for complaint when he contacted it. But while the PR sent the Letter of Complaint to the Lender on 12 January 2024, the PR has provided us with evidence showing Mr R first contacted it in May 2020. The PR has provided us with a handwritten note that it has told us relates to the initial telephone conversation it had with Mr R as part of its client onboarding process. The note is dated 18 May 2020, and it specifically mentions membership being sold to him at the Time of Sale as an investment. That is the basis for his allegation that the Supplier breached Regulation 14(3) of the Timeshare Regulations which in turn rendered the credit relationship unfair to him. The PR has also provided us with a Letter of Authority that Mr R signed on 2 June 2020, authorising the PR to represent him in making complaints. All of that was more than three and a half years before his complaint was made to the Lender It seems to me that for Mr R to have authorised the PR to represent him in making complaints, having spoken to the PR about his purchase of Fractional Club membership at the Time of Sale and having apparently told it that membership was sold to him as an investment, he more likely than not, as a result of that conversation, had become aware at that time of the problems he’s complaining about here, that he had suffered a loss as a result of them, and that the Lender could be held responsible. Indeed as I noted above, the PR itself has said Mr R became aware of a cause for complaint when he contacted it. And as the evidence before me clearly shows that was more than three years before his complaint was to the Lender, these parts of his complaint were also made outside the time limit at DISP 2.8.2 R (2)(b). Exceptional circumstances I can waive the time limits if the failure to comply with them was due to exceptional circumstances. But from everything I have seen, neither Mr R nor the PR have referred us to any exceptional circumstances that prevented him from complaining sooner.

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I note the PR’s argument that the “limitation period” may be extended in cases involving fraud or concealment. But while that might potentially apply in relation to the Limitation Act 1980 (the “LA”), it does not apply to the DISP rules, which are what I must consider, and have considered, in determining whether this Service has jurisdiction to consider this complaint. Therefore, I’ve found Mr R’s failure to comply with the time limits was not due to exceptional circumstances. So, I’m unable to waive the time limits. The declined Section 75 claim complaint 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. In general, lenders can reasonably reject Section 75 claims that they are first informed about after the claim has become time-barred under the Limitation Action 1980 (the “LA”), as it would not be fair to expect creditors to look into such claims so long after the liability arose, and after a limitation defence would have been available in court. So it’s relevant to consider if Mr R’s Section 75 claim was time-barred under the LA before it was put to the Lender. 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. Any claim against a lender under Section 75 is also “an action to recover any sum by virtue of any enactment” under Section 9 of the LA. Such claims also have a time limit of six years from the date the cause of action accrued. In claims for misrepresentation, the cause of action accrues at the point a loss is incurred. In Mr R’s case, that was at the Time of Sale because he entered into the agreement to purchase Fractional Club membership, and the related Credit Agreement to finance the purchase, based on the alleged misrepresentations of the Supplier which he says he relied on. Mr R first notified the Lender of his Section 75 claim on 12 January 2024. As that was more than six years after the Time of Sale, I do not think it was unfair or unreasonable of the Lender to reject his claim relating to the Supplier’s alleged misrepresentations. The PR has argued that the LA includes provisions for the extension of the limitation period in the case of concealment or fraud. It says the Supplier concealed the sale of Fractional Club membership as an investment because the purchase documentation does not refer to membership as an investment.

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However, the PR’s arguments here focus on Mr R’s unfair credit relationship complaint, and that part of his complaint falls outside the jurisdiction of this Service for the reasons I explained above. Moreover, to the extent that the PR’s arguments do relate to Mr R’s misrepresentation claim, I don’t find they are of assistance because they are inconsistent with the allegations made in his complaint that the Supplier represented membership to him as an investment. Therefore I’m not persuaded there was concealment in Mr R’s case such that the limitation period for bringing his misrepresentation claim could be extended. Conclusion Given the facts and circumstances of this complaint, I don’t think this Service has jurisdiction to consider Mr R’s irresponsible lending, unauthorised credit intermediary and unfair credit relationship complaints. And while I think this Service has jurisdiction to consider his declined Section 75 claim complaint, I don’t think the Lender acted unfairly or unreasonably by not upholding his claim. My jurisdiction decision It’s my jurisdiction decision that: • Mr R’s irresponsible lending, unauthorised credit intermediary and unfair credit relationship complaints cannot be considered by the Financial Ombudsman Service; and, • Mr R’s declined Section 75 claim complaint can be considered by the Financial Ombudsman Service. My final decision For the reasons set out above, I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr R to accept or reject my decision before 14 April 2026. Asa Burnett Ombudsman

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