Clydesdale Financial Services Limited · DRN-6245867

The complaint Mrs M’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 her 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. Background to the complaint Mrs M and her husband Mr R purchased membership of a timeshare that I’ll call the ‘Fractional Club’ from a timeshare provider (the ‘Supplier’) on 6 February 2017. They entered into an agreement with the Supplier to buy 900 fractional points at a cost of £14,298 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mrs M and Mr 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. Mrs M and Mr R paid for their Fractional Club membership by taking finance of £14,298 from the Lender (the ‘Credit Agreement’) in Mrs M’s name. As Mrs M was the only borrower named on the Credit Agreement, this complaint has been brought in her name only. Mrs M – using a professional representative (the ‘PR’) – wrote to the Lender on 15 May 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 Mrs M’s concerns as a complaint and issued its final response letter on 2 July 2024, rejecting it on every ground. The complaint was subsequently referred to the Financial Ombudsman Service. It was assessed by an Investigator who, having considered the information on file, rejected the complaint on its merits. Mrs M disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision. So the complaint was passed to me to decide. I considered the matter and issued a provisional decision (the ‘PD’) dated 9 March 2026. In that decision, I said: “I’ve considered all the available evidence and arguments to decide what’s 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’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.

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The legal and regulatory context 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. 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’s 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 Section 75 of the CCA: the Supplier’s misrepresentation at the Time 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 has said Mrs M’s claim was made too late under the provisions of the Limitation Act 1980 (the “LA”). It says that under the LA, Mrs M had six years from the Time of Sale to make her claim and, as she made her claim over six years later, it has a defence to any claim. Having considered these matters, I agree with what the Lender has said, so I do not think it acted unfairly or unreasonably when it dealt with this particular Section 75 claim.

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However, that is not an end to the matter as misrepresentations made at the Time of Sale can still give rise to an unfair credit relationship, even if the limitation period to make a freestanding claim has passed (see Scotland and Reast v. British Credit Trust Limited [2014] EWCA Civ 790). So although I think it was fair for the Lender to reject the claim made under Section 75 of the CCA, I will consider the substance of the alleged misrepresentation here. It was said in the Letter of Complaint that Fractional Club membership had been misrepresented by the Supplier at the Time of Sale because Mrs M was told by the Supplier that Fractional Club membership was an “investment” when that was not true. However, this does not strike me as a misrepresentation even if such a representation 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 – nor was it untrue to tell prospective members that they would receive some money when the allocated property is sold. After all, a share in an allocated property was clearly the purchase of a share of the net sale proceeds of a specific property in a specific resort. And while the PR might question the exact legal mechanism used to give prospective members that interest, it did not change the fact that they acquired such an interest. So, while I recognise that Mrs M - and the PR - have concerns about the way in which Fractional Club membership was sold by the Supplier, I can only consider whether there was a factual and material misrepresentation by the Supplier. And for the reasons I’ve set out above, I’m not persuaded that there was. 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 Mrs M and the Lender along with all of 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.

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I have then considered the impact of these on the fairness of the credit relationship between Mrs M and the Lender. The Supplier’s sales & marketing practices at the Time of Sale Mrs M’s complaint about the Lender being party to an unfair credit relationship was and is made for several reasons. It includes allegations that: 1. Mrs M was pressured by the Supplier into purchasing Fractional Club membership at the Time of Sale. 2. The right checks were not carried out before the Lender lent to Mrs M. 3. The loan interest was excessive. However, as things currently stand, none of these strike me as reasons why this complaint should succeed. I acknowledge Mrs M may have felt weary after a sales process that went on for a long time. But she says little about what was said and/or done by the Supplier during their sales presentation that made her feel as if she had no choice but to purchase Fractional Club membership when she simply did not want to. She was also given a 14-day cooling off period and she has not provided a credible explanation for why she did not cancel her membership during that time. And with all of that being the case, there is insufficient evidence to demonstrate that Mrs M made the decision to purchase Fractional Club membership because her 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 Mrs M was actually unaffordable before also concluding that she lost out as a result, and then consider whether the credit relationship with the Lender was unfair to her for this reason. The PR says Mrs M was heavily indebted at the Time of Sale, referring to a copy of her credit report that listed a number of credit accounts. However, the report shows the vast majority of those accounts were opened sometime after the Time of Sale, and the report does not indicate that Mrs M was having difficulty managing the accounts that were open at the Time of Sale. So having considered this and all the other information provided, I’m not satisfied that the lending was unaffordable for Mrs M. Furthermore, I do not think the rate of interest on the loan 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 Mrs M’s credit relationship with the Lender was rendered unfair to her under Section 140A for any of 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 her. And that’s the suggestion that Fractional Club membership was marketed and sold to her as an investment in breach of the prohibition against selling timeshares in that way.

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The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations The Lender does not dispute, and I’m satisfied, that Mrs M’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 Mrs M say that the Supplier did exactly that at the Time of Sale – saying, in summary, that she 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. A share in the Allocated Property clearly constituted an investment as it offered Mrs M the prospect of a financial return – whether or not, like all investments, that turned out to be more than what she first put into it. But it’s important to note at this stage that the fact 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 does not 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 Mrs M 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 her as an investment, i.e. told her or led her to believe that Fractional Club membership offered her 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 Mrs M, 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, I acknowledge the Supplier’s sales process left open the possibility that the sales representative(s) may have positioned Fractional Club membership as an investment. So, I accept it’s also possible that Fractional Club membership was marketed and sold to Mrs M as an investment in breach of Regulation 14(3).

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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 relationship between the Lender and Mrs M have been rendered unfair to her had there been a breach of Regulation 14(3) of the Timeshare Regulations? Having found 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 Mrs M 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’m to conclude that a breach of Regulation 14(3) led to a credit relationship between Mrs M and the Lender that was unfair to her and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led her to enter into the Purchase Agreement and the Credit Agreement is an important consideration. But 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 Mrs M decided to go ahead with her purchase. The evidence before me is: • A signed statement from Mrs M dated 7 June 2019 in which she said: “The main reason, we succumbed to agreeing to purchase the Fractional was that the Rep on numerous times mentioned that the Fractional was an investment and that we would get all our money back when it was sold in 16 years. I was told this is an investment, something that will be a part of our property and we will be able to sell it when we feel that we didn’t need it anymore.” • A handwritten note from the PR dated 30 May 2019, which it says relates to its initial telephone call with Mrs M, that included the following: “Explained the Fractional purchase and how enjoyable holiday plus an investment on top. Profit at the end of term.” • A claim form dated 24 May 2019 Mr R alone completed for a third party company with a view to relinquishing Fractional Club membership in which he said: “Had points in 2017 – on 1st hol told… fractional was better could trade in points & get all money back at the end of 19 years & still holidays paid for (sic).” While the evidence suggests Mrs M decided to purchase Fractional Club membership because the Supplier told her it was an investment, I don’t find the evidence consistently shows she understood that to mean there was a prospect of a financial gain. Mrs M’s recollection in her statement that she would “get all [her] money back”, and the very similar comment made on the claim form, does not make out that she was led to believe membership offered her the prospect of a financial gain. Her choice of words in her statement, which presumably represents her best account of what happened at the Time of

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Sale, does not leave open the possibility that what she gets back from membership could be more than what she paid for it (i.e. a profit). Notwithstanding that conclusion, I have serious concerns about the reliability of Mrs M’s statement in this case. The title of her statement refers to a different lender which financed her later purchase of a fractional timeshare in 2018 which she also referred to in the body of the statement. So it seems to me that this statement may not have been produced with her purchase at the Time of Sale in mind. Furthermore the statement makes reference to the payment of annual management fees “even though nobody is travelling due to the pandemic.” The COVID-19 pandemic, to which I assume Mrs M was referring, was not declared by the World Health Organisation until March 2020, around nine months after she purportedly wrote her statement. This raises the possibility that Mrs M’s statement was not written when she said it was and/or has been edited over time. As result, there is a real risk in my view that Mrs M’s statement is not an accurate reflection of her recollections of the Time of Sale as they were in June 2019. This leads me to conclude that even if I found her statement persuasive (which I do not for the reasons I’ve explained above), I could not give it the weight necessary to finding the credit relationship in question was unfair for reasons relating to a breach of the relevant prohibition. I acknowledge the PR’s note does mention “profit at the end of term,” but I do not find this evidence persuasive either. The note is the PR’s own account of what was discussed during the call. It’s not a transcript of the call and it provides little to no detail of what questions the PR asked Mrs M and how she responded to them. I accept it’s possible that the note accurately reflects something she said during the call, but I haven’t been provided with a recording of the call to prove that, and as I mentioned above, the language used in the note is not consistent with the other evidence provided. With all of that said, I’m not currently persuaded by the evidence before me that Mrs M was motivated to go ahead with her purchase by the prospect of a financial gain. That does not mean she was not 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 Mrs M herself does not persuade me that her purchase was motivated by her 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 she 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’m not persuaded that Mrs M’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). And for that reason, I do not think the credit relationship between Mrs M and the Lender was unfair to her even if the Supplier had breached Regulation 14(3). 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 Mrs M and the Lender under the Credit Agreement and related Purchase Agreement was unfair to her. And as things currently stand, I do not think it would be fair or reasonable that I uphold this complaint on that basis.”

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In conclusion, given the facts and circumstances of this complaint, I did not think that the Lender acted unfairly or unreasonably in relation to Mrs M’s Section 75 claim, and I was not persuaded that the Lender was party to a credit relationship with her under the Credit Agreement that was unfair to her for the purposes of Section 140A of the CCA. And having taken everything into account, I could see no other reason why it would be fair or reasonable to direct the Lender to compensate her. I gave both parties the opportunity to respond to the PD. The PR responded stating it did not accept the PD, and it provided some further comments and evidence it wished to be considered. The Lender confirmed it accepted the PD and had nothing further to add. As the parties have now had the opportunity to respond to the PD, and having received the responses I mentioned above, I’m now finalising my decision on this complaint. 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. Again, my role as an Ombudsman is not to address every single point which has been made to date, but to decide what’s fair and reasonable in the circumstances of this complaint. If I have not commented on, or referred to, something that either party has said, this does not mean I have not 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 Mrs M and the Lender was unfair to her. In particular, the PR has provided further comments in relation to whether the membership was sold to her as an investment at the Time of Sale. As outlined in my PD, the PR originally raised various other points of complaint, all of which I addressed at that time. But it didn’t make any further comments in relation to all of those points in its response to my PD. Indeed, it has not said it disagrees with any of my provisional conclusions in relation to those other points. Since I have not 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 its 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 The PR has provided further comments on Mrs M’s likely motivations for purchasing Fractional Club membership at the Time of Sale. I recognise it has interpreted the evidence differently to how I did in my PD, and it considers the evidence points to Mrs M having been motivated by the prospect of a financial gain from Fractional Club membership.

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In summary, the PR’s argument is that the absence of a clear indication Mrs M was interested in the holiday rights of membership, and her recollections that it was sold to her as “an investment,” means her purchasing decision must have been financially motivated. And whether the financial benefit of membership was described to her as “getting all her money back” or “a profit,” she would have considered that amounted to a financial gain. I have thought carefully about what the PR has said, but I don’t agree that in this case, the absence of a clear indication that Mrs M was interested in the holiday rights of membership and her recollections that it was sold to her as “an investment,” should necessarily lead me to conclude her purchase was motivated by the prospect of a financial gain. And considering the expectation or hope of financial gain or profit seems to me to be central to the definition of an investment as set out by the decided authorities, I think the distinction between getting “all her money back,” or “a profit,” is highly relevant in this case. In my PD I explained the reasons why I didn’t think Mrs M’s purchase was motivated by the prospect of a financial gain (i.e. a profit). And having 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. I still do not find Mrs M’s testimony makes out that she thought there was a possibility of a profit from membership. In the context of the assertion that the possibility of a profit was an important and motivating factor behind her purchase, I find her choice of words difficult to understand. And in any event, I don’t find the PR’s response allays the concerns I set out in my PD about the reliability of her testimony in this case. As I said in my PD, I acknowledge the PR’s note does mention “profit at the end of term.” But I do not find the PR’s response allays the concerns I set out in my PD about this evidence. As such, I’m not persuaded I can give this evidence the weight necessary to finding the credit relationship in question was unfair for reasons relating to a breach of Regulation 14(3). 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 Mrs M’s purchasing decision. And for that reason, I do not think the credit relationship between her and the Lender was unfair to her even if the Supplier had breached Regulation 14(3). S140A: Conclusion Given all of the factors I’ve looked at in this part of my decision, including the relevant relationships, arrangements and payments between the Lender and the Supplier and having taken all of them into account, I’m not persuaded that the credit relationship between Mrs M and the Lender under the Credit Agreement and related Purchase Agreement was unfair to her. So, I don’t think it’s fair or reasonable that I uphold this complaint on that basis. Overall conclusion Given the facts and circumstances of this complaint, I do not think the Lender acted unfairly or unreasonably in relation to Mrs M’s Section 75 claim, and I’m not persuaded that the Lender was party to a credit relationship with her under the Credit Agreement that was unfair to her 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 her.

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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 Mrs M to accept or reject my decision before 21 April 2026. Asa Burnett Ombudsman

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