Clydesdale Financial Services Limited · DRN-6251738

The complaint Mr G’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 (the ‘CCA’) and (2) deciding against paying a claim under Section 75 of the CCA. What happened Mr and Mrs G purchased membership of a timeshare (the ‘Fractional Membership’) from a timeshare provider (the ‘Supplier’) on 18 July 2014 (the ‘Time of Sale’). Prior to that Mr and Mrs G were existing customers of the Supplier having purchased, in 2011, 17,0001 points in its ‘European Collection’. These points worked like a currency such that, every year, Mr and Mrs G could use the points to stay at the Supplier’s holiday accommodation. That accommodation ‘cost’ different amounts of points depending on the size of the apartment, its location and the time of year. At the Time of Sale, Mr and Mrs G entered into two agreements with the Supplier (the ‘Purchase Agreements’) to buy: • 10,000 ‘fractional points’, trading in 10,000 of their existing points from their ‘non- fractional’ European Collection membership towards this. This was at a cost of £11.933.33, with a conversion price given for their European Collection points of £1 per point. • 20,000 ‘fractional points’, trading in 7,000 of their existing points from their ‘non- fractional’ European Collection membership towards this. This was at a cost of £23,866.67, with a conversion price given for their European Collection points of £1 per point. Unlike the European Collection, Fractional Membership was asset backed – which means it gave Mr and Mrs G more than just holiday rights. It also included a share in the net sale proceeds of the properties named on their Purchase Agreements (the ‘Allocated Properties’) after their membership term ends. Mr and Mrs G paid for their Fractional Membership by taking finance of £35,8002 from the Lender (the ‘Credit Agreement’) in Mr G’s sole name, making him the sole and only complainant in this case. This finance was repaid in full in August 20143. 1 7,000 points followed by 10,000 points 2 £11,933 plus £23,866.67 3 Repaid from new borrowing which itself was repaid in June 2016

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Mr G – using a professional representative (the ‘PR’) – wrote to the Lender on 14 July 2019 (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. Mr G referred his complaint to the Financial Ombudsman Service on 22 June 2022. It was assessed by two investigators who, having considered the information on file, both upheld the complaint on its merits. Both Investigators thought that the Supplier had marketed and sold Fractional Membership as an investment to Mr G at the Time of Sale in breach of Regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (the ‘Timeshare Regulations’). And given the impact of that breach on his purchasing decisions, both investigators concluded that the credit relationship between the Lender and Mr G was rendered unfair to him for the purposes of section 140A of the CCA. The Lender disagreed 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’) on 25 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 currently think that this complaint should be upheld because the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing and/or selling Fractional Membership to Mr G as an investment, which, in the circumstances of this complaint, rendered the credit relationship between him and the Lender unfair to him for the purposes of Section 140A of the CCA. However, before I explain why, I want to make it clear that my role as an Ombudsman isn’t 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, while I recognise that there are a number of aspects to Mr G’s complaint, it isn’t necessary to make formal findings on all of them. That is because, even if those aspects of the complaint ought to succeed, the redress I’m currently proposing puts Mr G in the same or better position than he would be if the redress was limited to those other aspects of the complaint. What’s more, I’ve made my decision on the balance of probabilities – which means I’ve based it on what I think is more likely than not to have happened given the available evidence and the wider circumstances. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? Having considered the entirety of the credit relationship between Mr G and the Lender along with all of the circumstances of the complaint I 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’ve looked at all the evidence provided from both parties, including: 1. The Supplier’s sales and marketing practices at the Time of Sale; 2. The provision of information by the Supplier at the Time of Sale, including the contractual documentation and disclaimers made by the Supplier;

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3. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; and 4. The inherent probabilities of the sale given its circumstances. I’ve then considered the impact of the above on the fairness of the credit relationship between Mr G and the Lender. The Supplier’s breach of Regulation 14(3) of the Timeshare Regulations The Lender doesn’t dispute, and I’m satisfied, that Mr G’s Fractional 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 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 Mr G says that the Supplier did exactly that at the Time of Sale. The term “investment” isn’t defined in the Timeshare Regulations. In Shawbrook & BPF v FOS, the parties agreed that, 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” at [56]. I will use the same definition. Mr G’s share in the Allocated Properties clearly, in my view, constituted investments as they offered him the prospect of a financial return – whether or not, like all investments, that was more than what he first put into them. But the fact that Fractional 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 didn’t ban products such as Fractional Membership. They just regulated how such products were marketed and sold. To conclude, therefore, that Fractional Membership was marketed or sold to Mr G as an investment in breach of Regulation 14(3), I’ve 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 Membership offered him the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint.

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In a statement dated 21July 2020 Mr G says: “We were…on holiday when we were approached by the representatives and invited to an update meeting. This was in fact a long sales meeting. The representatives introduced us to fractional points. We were advised that fractional points were an investment in property that required to be sold in approximately 15 years. When sold we would have our fraction of the market value and a huge profit from the sale. The representatives advised that the property market was very buoyant. I questioned the amounts as this seemed a very large amount of money for what a fraction of the property was only. We were advised that the market price would only ever increase, and we would have a significant profit from the sale. Additionally, we would have a guaranteed exit from our timeshare contract with [the Supplier].” The Lender says I should be cautious about placing too much weight on Mr G’s statement (including the extract above) due to “[his] recollection of events [being] flawed”. I accept that their might be some inconsistencies in Mr G’s statement. But I’m not persuaded that these are particularly material or that they should cause me to question everything Mr G says in his statement, including the extract above. And in respect of the extract above I would add that I find it entirely plausible that Mr G is unable to quote now, or say five years after the Time of Sale, exact figures quoted to him by the Supplier. There is evidence in this case that the Supplier made efforts to address the possibility that prospective purchasers such as Mr G might view Fractional Membership as an investment. There were, for instance, disclaimers in the paperwork the Supplier issued to Mr G that says Fractional Membership shouldn’t be regarded as a property or financial investment. Mr G signed these papers to confirm he had received them. But weighing up what happened in practice is in my view rarely as simple as looking at the paperwork, particularly where (as here) that paperwork was spread over several different documents and across almost 100 pages. It’s by no means clear that Mr G would have read and understood the disclaimers, which were in any event provided after the Supplier’s sales presentation and notably, after Mr G made the decision to take out Fractional Membership. There’s little that’s been presented in the way of documentary evidence about how the Supplier presented Fractional Membership. For example, I haven’t been provided with any set sales presentations the Supplier confirms were used, or any other key marketing materials. Absent this, I’ve thought about what each of the parties has said, in order to reach a finding on the balance of probabilities. Mr G has suggested the Supplier breached Regulation 14(3) at the Time of Sale, including expressly telling him that Fractional Membership was an investment and that there was a profit to be made on his Fractional Membership. I find Mr G’s evidence in this respect consistent and compelling that it was more likely than not that the way in which Fractional Membership was sold to Mr G included elements that amounted to marketing it as an investment with the prospect of him making a profit. I’m inclined to say that the existence of the disclaimers recognises there was a real risk of buyers forming the impression, from the way the Supplier was marketing and selling Fractional Membership, that it was an investment. The difficulty of articulating the benefit of fractional ownership in a way that distinguished it from Mr G’s existing European Collection membership is a relevant factor in this case. And here, beyond the disclaimers referred to above, I don’t have anything from the Supplier or the Lender that shows how that benefit would have been presented to Mr G.

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Further, I think it would be fair to say that in light of the allegations Mr G has made about what the Supplier told him, the disclaimer wording in the documents doesn’t entirely counter what he says. A prospective member who was told what Mr G says the Supplier told him could easily read the disclaimers in the paperwork without being dissuaded that investment was a legitimate secondary purpose of membership, even if it wasn’t the primary purpose. I accept of course that being asked to recall specific information some years later is rendered more difficult with the passage of time. But it does seem to me that Mr G’s evidence in this respect has been consistent and carries significant weight on the motivating factors in his decision to purchase Fractional Membership. There were of course other factors that affected Mr G’s decision, not least of which was the attraction of the holiday benefits conferred by Fractional Membership over and above his existing European Collection membership. Over the preceding years he’d made good use of his European Collection membership and continued to do so with his Fractional Membership. But that doesn’t change whether the prospect of an investment offering a profit was a material consideration for Mr G when he purchased Fractional Membership. It strikes me that if Mr G had merely been interested in increasing the holiday rights he already held, he could simply have increased his non-factional European Collection points in the same way as he had before. This suggests there had to be some other reason Mr G purchased Fractional Membership. That doesn’t mean he wasn’t interested in holidays. His use of his European Collection membership demonstrates this quite clearly. That is hardly surprising given the nature of a timeshare product. But on my reading of Mr G’s evidence, it was the prospect of a financial gain from Fractional Membership that was a motivating factor when he decided to go ahead with his purchases and the associated borrowing. I note that the Lender submits that Fractional Membership gave Mr G a shorter contract term. But as pointed out by the second Investigator, it would appear that Mr G had a shorter contract term with his European Collection membership. So I’m not persuaded that a short contract term could be said to have been a motivating factor in Mr G’s Fractional Membership purchasing decision. In conclusion, given the facts and circumstances of this complaint, I thought the Lender participated in and perpetuated an unfair credit relationship with Mr G under the Credit Agreement and related Purchase Agreements for the purposes of section 140A CCA and because of this I thought it was fair and reasonable for me to uphold the complaint. I then set out what I thought the Lender should have to do to compensate Mr G. Both parties responded to my provisional findings to say they accepted them. Having received the relevant responses from both parties, I’m now finalising my decision.

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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 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is, in many ways, no different to that shared in several hundred published ombudsman decisions on very similar complaints – which can be found on the Financial Ombudsman Service’s website. And with that being the case, it isn’t necessary to set out that context in detail 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. As both parties have confirmed they accept my provisional findings I can confirm I see no reason to depart from them and I now confirm them as final. Putting things right Having found that Mr G wouldn’t have agreed to purchase Fractional Membership at the Time of Sale were it not for the breach of Regulation 14(3) of the Timeshare Regulations by the Supplier (as deemed agent for the Lender), and the impact of that breach meaning that, in my view, the relationship between the Lender and Mr G was unfair under section 140A of the CCA, I think it would be fair and reasonable to put him back in the position he would have been in had he not purchased the Fractional Membership (i.e., not entered into the Purchase Agreements), and therefore not entered into the Credit Agreement, provided Mr and Mrs G agree to assign to the Lender their Fractional Points or hold them on trust for the Lender if that can be achieved. Mr G was an existing European Collection member and his membership was traded in against the purchase price of Fractional Membership. Under his European Collection membership, he had 17,000 European Collection Points. And, like Fractional Membership, he had to pay annual management charges as a European Collection member. So, had Mr G not purchased Fractional Membership, he would have always been responsible to pay an annual management charge of some sort. With that being the case, any refund of the annual management charges paid by Mr G from the Time of Sale as part of his Fractional Membership should amount only to the difference between those charges and the annual management charges he would have paid as an ongoing European Collection member. So, here’s what I think needs to be done to compensate Mr G with that being the case – whether or not a court would award such compensation: (1) The Lender should refund Mr G’s repayments to it under the Credit Agreement. I don’t belive there is an outstanding balance on the loan, but the Lender should cancel if it if there is one.

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(2) In addition to (1), the Lender should also refund the difference between Mr G’s Fractional Membership annual management charges paid after the Time of Sale and what his European Collection membership annual management charges would have been had he not purchased Fractional Membership. (3) The Lender can deduct: i. The value of any promotional giveaways that Mr G used or took advantage of; and ii. The market value of the holidays* Mr G took using his Fractional Membership points if the points value of the holiday(s) taken amounted to more than the total number of European Collection points he would have been entitled to use at the time of the holiday(s) as an ongoing European Collection member. However, this deduction should be proportionate and relate only to the additional Fractional membership points that were required to take the holiday(s) in question. For example, if Mr G took a holiday worth 2,550 Fractional Membership points and he would have been entitled to use a total of 2,500 European Collection points at the relevant time, any deduction for the market value of that holiday should relate only to the 50 additional Fractional Membershop points that were required to take it. But if he would have been entitled to use 2,600 European Collection points, for instance, there shouldn’t be a deduction for the market value of the relevant holiday. (I’ll refer to the output of steps 1 to 3 as the ‘Net Repayments’ hereafter) (4) Simple interest** at 8% per annum should be added to each of the Net Repayments from the date each one was made until the date the Lender settles this complaint. (5) The Lender should remove any adverse information recorded on Mr G’s credit file in connection with the Credit Agreement reported within six years of this decision. (6) If Mr and Mrs G’s Fractional Membership is still in place at the time of this decision, as long as they agree to hold the benefit of their interest in the Allocated Property for the Lender (or assign it to the Lender if that can be achieved), the Lender must indemnify Mr G against all ongoing liabilities as a result of his Fractional Membership. *I recognise that it can be difficult to reasonably and reliably determine the market value of holidays when they were taken a long time ago and might not have been available on the open market. So, if it isn’t practical or possible to determine the market value of the holidays Mr G took using his Fractional Membership points, deducting the relevant annual management charges (that correspond to the year(s) in which one or more holidays were taken) payable under the Purchase Agreements seems to me to be a practical and proportionate alternative in order to reasonably reflect his usage. **HM Revenue & Customs may require the Lender to take off tax from this interest. If that’s the case, the Lender must give Mr G a certificate showing how much tax it’s taken off if he asks for one. My final decision For the reasons I’ve explained, my final decision is that to settle this complaint, Clydesdale Financial Services Limited trading as Barclays Partner Finance must take the steps I’ve set out above.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Mr G to accept or reject my decision before 27 April 2026. Peter Cook Ombudsman

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