First Holiday Finance Ltd · DRN-6256428

The complaint Miss A’s complaint is, in essence, that First Holiday Finance Ltd (‘FHF’) 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 Miss A was the member of a timeshare provider (the ‘Supplier’) – having purchased a trial membership from it previously. But the product at the centre of this complaint is her membership of a timeshare that I’ll call the ‘Fractional Club’ – which she bought on 11 April 2012 (the ‘Time of Sale’). She entered into an agreement with the Supplier to buy 747 fractional points at a cost of £10,326 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Miss A 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 her membership term ends. Miss A paid for her Fractional Club membership by taking finance of £9,826 from FHF (the ‘Credit Agreement’). Miss A – using a professional representative (the ‘PR’) – wrote to FHF on 1 June 2023 (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. FHF dealt with Miss A’s concerns as a complaint and issued its final response letter on 10 June 2024, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service. It was assessed by an Investigator who, having considered the information on file, rejected the complaint on its merits. Miss A disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision, so the complaint was passed to me. I considered the matter and issued a provisional decision (the ‘PD’). 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 think this complaint should be upheld. However, before I explain why, I want to make it clear that my role as an Ombudsman is not to address every single point that has been made to date. Instead, it is to decide what is fair and reasonable in the circumstances of this complaint. So, if I have not commented on, or referred to, something that either party has said, that does not mean I have not considered it.

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Section 75 of the CCA: the Supplier’s misrepresentations 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. FHF doesn’t dispute that the relevant conditions are met. There are, though, certain time limits that apply – and I think these mean Miss A’s claim would’ve been time-barred. The Limitation Act 1980 sets out limitation periods, or time limits, for bringing various types of legal claim. For a claim based on contract, it’s not generally possible to start court action more than six years after the cause of action arose. If a claim is brought too late, the respondent is likely to have a complete defence to the claim on that basis. For claims relating to misrepresentation, the time limit would typically be six years from the date the claimant suffers damage as a result of the misrepresentation. For example, entering into a contract – and incurring liabilities – when they would otherwise not have done. Miss A’s claim under Section 75 is that but for the Supplier’s various alleged misrepresentations, she wouldn’t have entered into the Purchase Agreement (and, therefore, the Credit Agreement). So it is the date on which she entered into those agreements that her cause of action arose, meaning she had six years from that date within which to bring this claim. Miss A entered into the Purchase Agreement and Credit Agreement on 11 April 2012. She raised her claim under Section 75 within the Letter of Complaint dated 1 June 2023 – more than six years later. That being the case, I don’t think FHF acted unfairly or unreasonably in declining the claim. While it declined the claim on its merits, it could simply have declined it without consideration given it had a complete defence under the Limitation Act. I have, however, later considered whether these alleged misrepresentations could have been something that caused an unfair credit relationship. Section 140A of the CCA: did FHF 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 Miss A and FHF along with all of the circumstances of the complaint, I don’t think the credit relationship

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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 in relation to Fractional Club membership, including the contractual documentation and disclaimers made by the Supplier; 3. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; 4. The inherent probabilities of the sale given its circumstances; and, when relevant 5. Any existing unfairness from a related credit agreement. I have then considered the impact of these on the fairness of the credit relationship between Miss A and FHF given her circumstances at the Time of Sale. I note that the PR, in its response to our Investigator’s assessment, highlighted under Section 140B (9) of the CCA that the burden of proof falls on FHF to disprove the allegation that its relationship with Miss A was unfair. I agree that this is correct, placing a burden on lenders during the process of litigation. That does not mean, though, that FHF – or I – should take a claim at face value. There remains an onus on Miss A to provide some evidence for the claim she is making, despite the overall burden of proof resting with FHF, as was set out in the judgment in Smith and another v Royal Bank of Scotland plc [2023] UKSC 34 at paragraph 40. I also remind both parties that it is my role to make findings on what I consider to be fair and reasonable in all the circumstances of any given complaint. The Supplier’s sales & marketing practices at the Time of Sale Miss A’s complaint about FHF being party to an unfair credit relationship was made for several reasons. I have firstly considered whether the misrepresentations she alleges were made by the Supplier in the context of her Section 75 claim could have caused any unfairness for the purposes of Section 140A. It was said in the Letter of Complaint that Fractional Club membership had been misrepresented by the Supplier at the Time of Sale because Miss A was: 1. Told that she had purchased an investment that would “appreciate in value”. 2. Told that she would have a share in a property that would increase in value. 3. Made to believe that she would have access to “the holiday apartment” at any time all year round. However, neither points 1 nor 2 strike me as misrepresentations even if such representations 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. And even if the Supplier’s sales representatives went further and suggested that the share in question would increase in value, perhaps considerably so, that sounds like nothing more than a honestly held opinion as there isn’t any accompanying evidence to persuade me that the relevant sales representative(s) said something that, while an opinion, amounted to a statement of fact that they did not hold or could not have reasonably held.

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As for point 3, while it’s possible that Fractional Club membership was misrepresented at the Time of Sale for that reason, I don’t think it’s probable. The contractual paperwork that Miss A signed was clear in setting out that Miss A was not acquiring such a right. And the allegation is given little to none of the colour or context necessary to demonstrating that the Supplier made a false statement of existing fact and/or opinion. And as there isn’t any other evidence on file to support the suggestion that Fractional Club membership was misrepresented for that reason, I don’t think it was. So, while I recognise that Miss A and the PR have concerns about the way in which Fractional Club membership was sold by the Supplier, I do not think this caused any unfairness in Miss A’s credit relationship with FHF such that it warrants a remedy. Turning to the points specifically raised in relation to the potential unfairness of the relationship between Miss A and FHF, the PR said in the Letter of Complaint that the right checks weren’t carried out before FHF lent to Miss A. I haven’t seen anything to persuade me that was the case in this complaint given its circumstances. But even if I were to find that FHF 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 Miss A was actually unaffordable before also concluding that she lost out as a result and then consider whether the credit relationship with FHF was unfair to her for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Miss A. Connected to this is the suggestion by the PR that the Credit Agreement was arranged by an unauthorised credit broker, the upshot of which is to suggest that FHF wasn’t permitted to enforce the Credit Agreement. However, it looks to me like Miss A knew, amongst other things, how much she was borrowing and repaying each month, who she was borrowing from and that she was borrowing money to pay for Fractional Club membership. And as the lending doesn’t look like it was unaffordable for her, even if the Credit Agreement was arranged by a broker that didn’t have the necessary permission to do so (which I make no formal finding on), I can’t see why that led to Miss A suffering a financial loss – such that I can say that the credit relationship in question was unfair on her as a result. And with that being the case, I’m not persuaded that it would be fair or reasonable to tell FHF to compensate her, even if the loan wasn’t arranged properly. The PR says that Miss A was rushed into signing the contractual paperwork at the end of a long sales meeting, without having sufficient time to properly consider the implications of the agreement into which she was entering. I acknowledge and appreciate that Miss A may have felt weary after a sales process that went on for a long time. But what she has said does not give me the impression that the Supplier 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 the membership during that time. And with all of that being the case, there is insufficient evidence to demonstrate that Miss A made the decision to purchase Fractional Club membership because her ability to exercise that choice was significantly impaired by pressure from the Supplier. The PR also says that there was one or more unfair contract terms in the Purchase Agreement. But as I can’t see that any such terms were operated unfairly against Miss A in practice, nor that any such terms led her to behave in a certain way to her detriment, I’m not persuaded that any of the terms governing Fractional Club membership are likely to have led to an unfairness that warrants a remedy.

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Overall, therefore, I don’t think that Miss A’s credit relationship with FHF 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 FHF 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 prohibition against selling timeshares in that way. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations FHF does not dispute, and I am satisfied, that Miss A’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. This is what the provision said at the Time of Sale: “A trader must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment if the proposed contract would be a regulated contract.” But the PR says that the Supplier did exactly that at the Time of Sale – saying, in summary, that Miss A 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 Miss A the prospect of a financial return – whether or not, like all investments, that was more than what she 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. 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 Miss A 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 is clear that the Supplier made efforts to avoid specifically

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describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Miss A, 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 that the Supplier’s sales process left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s equally possible that Fractional Club membership was marketed and sold to Miss A as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Would the credit relationship between FHF and Miss A have been rendered unfair to her had there been a breach of Regulation 14(3) of the Timeshare Regulations? 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 Miss A and FHF 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 Miss A and FHF 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. To help me decide this point, I’ve carefully considered what Miss A has said in the course of her complaint about how the membership was sold to her and her motivation for purchasing it. I would note first of all that the evidence in this respect is quite limited. Within the Letter of Complaint, it is said that Miss A was told that she had purchased an investment that would increase in value. There was no further detail underpinning these statements within the Letter of Complaint, which are rather generic in nature. In fact, such assertions are made in an identical fashion by the PR in a number of other complaints. When referring the complaint to us, the PR included a statement made by Miss A in her own words in which she set out her recollections of her purchase from the Supplier. And in response to our Investigator’s assessment, the PR highlights that Miss A said: “To be honest when the calculations began it scared me and I voiced my concerns about this and them convincing me to upgrade from trial membership to full member(ship) because it was an investment and that I would get my money back after it was sold, so I could not lose.” This comment, and her statement more broadly, do not lead me to think that Miss A motivated to purchase Fractional Club membership by the prospect of a financial gain.

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Miss A’s statement as a whole is brief. There is little detail to what she has said about the investment element, both in terms of what the Supplier actually said to her and what benefit she was expecting to derive from it. This may, at least in part, reflect the difficulty Miss A will have had in recalling matters from some time ago – with the complaint being raised some 11 years after the Time of Sale. What Miss A has said does not speak to an expectation, or hope, of a profit. She mentions the prospect of getting her money back, but not making a gain. Elsewhere in her statement, Miss A refers to getting “some money back at the end” – which is what would happen after the sale of the Allocated Property and again is not indicative, to my mind, of a potential profit. Moreover, Miss A was evidently interested in the type of holidays offered by the Supplier, having already purchased a trial membership. And this was a clear motivating factor in her decision to purchase a full membership, given she notes the appeal of being able to take her two children on holiday “anywhere in the world where [the Supplier] is located”, that the Supplier’s offering had “taken out the hassle of booking accommodations and hotels” and that she “just wanted to go on holiday”. The PR also highlights that the “unit share” Miss A was acquiring was specifically recorded within the pricing sheet completed by the Supplier. It argues that this evidences that the investment element “played quite an important role in convincing” Miss A to purchase the membership. I do not agree with that. As I have accepted above, the investment element may well have been promoted to Miss A by the Supplier. But the recording of the unit share within the Supplier’s paperwork does not, to my mind, say any more about the part this played in Miss A’s decision to purchase the membership. Weighing all of this up, I’m not persuaded that the prospect of a financial gain from Fractional Club membership was an important and motivating factor when Miss A decided to go ahead with her purchase. That’s not to say she 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 Miss A herself doesn’t 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 am not persuaded that Miss A’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 she would have pressed ahead with her purchase whether or not there had been a breach of Regulation 14(3). And for that reason, I do not think the credit relationship between Miss A and FHF was unfair to her even if the Supplier breached Regulation 14(3). The Provision of Information by the Supplier at the Time of Sale The PR says that a payment of commission from FHF to the Supplier at the Time of Sale should lead me to uphold this complaint because, simply put, information in relation to that payment went undisclosed at the Time of Sale. As both sides already know, the Supreme Court handed down an important judgment on 1 August 2025 in a series of cases concerned with the issue of commission:

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Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd [2025] UKSC 33 (‘Hopcraft, Johnson and Wrench’). The Supreme Court ruled that, in each of the three cases, the commission payments made to car dealers by lenders were legal, as claims for the tort of bribery, or the dishonest assistance of a breach of fiduciary duty, had to be predicated on the car dealer owing a fiduciary duty to the consumer, which the car dealers did not owe. A “disinterested duty”, as described in Wood v Commercial First Business Ltd & ors and Business Mortgage Finance 4 plc v Pengelly [2021] EWCA Civ 471, is not enough. However, the Supreme Court held that the credit relationship between the lender and Mr Johnson was unfair under Section 140A of the CCA because of the commission paid by the lender to the car dealer. The main reasons for coming to that conclusion included, amongst other things, the following factors: 1. The size of the commission (as a percentage of the total charge for credit). In Mr Johnson’s case it was 55%. This was “so high” and “a powerful indication that the relationship…was unfair” (see paragraph 327); 2. The failure to disclose the commission; and 3. The concealment of the commercial tie between the car dealer and the lender. The Supreme Court also confirmed that the following factors, in what was a non- exhaustive list, will normally be relevant when assessing whether a credit relationship was/is unfair under Section 140A of the CCA: 1. The size of the commission as a proportion of the charge for credit; 2. The way in which commission is calculated (a discretionary commission arrangement, for example, may lead to higher interest rates); 3. The characteristics of the consumer; 4. The extent of any disclosure and the manner of that disclosure (which, insofar as Section 56 of the CCA is engaged, includes any disclosure by a supplier when acting as a broker); and 5. Compliance with the regulatory rules. From my reading of the Supreme Court’s judgment in Hopcraft, Johnson and Wrench, it sets out principles which apply to credit brokers other than car dealer–credit brokers. So, when considering allegations of undisclosed payments of commission like the one in this complaint, Hopcraft, Johnson and Wrench is relevant law that I’m required to consider under Rule 3.6.4 of the Financial Conduct Authority’s Dispute Resolution Rules (‘DISP’). But I don’t think Hopcraft, Johnson and Wrench assists Miss A in arguing that her credit relationship with FHF was unfair to her for reasons relating to commission given the facts and circumstances of this complaint. I haven’t seen anything to suggest that FHF and Supplier were tied to one another contractually or commercially in a way that wasn’t properly disclosed to Miss A, nor have I seen anything that persuades me that the commission arrangement between them gave the Supplier a choice over the interest rate that led Miss A into a credit agreement that cost disproportionately more than it otherwise could have. I acknowledge that it’s possible that FHF and the Supplier failed to follow the regulatory guidance in place at the Time of Sale insofar as it was relevant to disclosing the commission arrangements between them.

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But as I’ve said before, 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. And with that being the case, it isn’t necessary to make a formal finding on that because, even if FHF and the Supplier failed to follow the relevant regulatory guidance at the Time of Sale, it is for the reasons set out below that I don’t currently think any such failure is itself a reason to find the credit relationship in question unfair to Miss A. Based on what I’ve seen so far, the Supplier’s role as a credit broker wasn’t a separate service and distinct from its role as the seller of timeshares. It was simply a means to an end in the Supplier’s overall pursuit of a successful timeshare sale. I can’t see that the Supplier gave an undertaking – either expressly or impliedly – to put to one side its commercial interests in pursuit of that goal when arranging the Credit Agreement. And as it wasn’t acting as an agent of Miss A but as the supplier of contractual rights she obtained under the Purchase Agreement, the transaction doesn’t strike me as one with features that suggest the Supplier had an obligation of ‘loyalty’ to her when arranging the Credit Agreement and thus a fiduciary duty. I recognise that FHF was and is part of the same group of companies as the Supplier. And I acknowledge that tie may not have been adequately disclosed at the Time of Sale. But I can’t currently see why that renders the credit relationship between Miss A and FHF unfair to her – such that I should uphold the complaint. I say that because FHF has explained that the Supplier would share finance proposals among its approved external finance partners; the Supplier couldn’t write all its finance business “in-house”; and FHF largely provided loans to customers whose circumstances fell outside of its external finance partners’ lending terms. So, I’m not persuaded that Miss A was led into a credit agreement with FHF because it was tied in some way to the Supplier. What’s more, in stark contrast to the facts of Mr Johnson’s case, as I understand it, FHF didn’t pay the Supplier any commission at the Time of Sale. And with that being the case, even if there were information failings at that time and regulatory failings as a result (which I make no formal finding on), I’m not currently persuaded that the commission arrangements between the Supplier and FHF were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to Miss A. 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 Miss A and FHF under the Credit Agreement and related Purchase Agreement was unfair to her. And as things currently stand, I don’t think it would be fair or reasonable that I uphold this complaint on that basis. In conclusion, given the facts and circumstances of this complaint, I did not think that FHF acted unfairly or unreasonably when it dealt with Miss A’s Section 75 claim, and I was not persuaded that FHF 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 FHF to compensate her. FHF responded to the PD and accepted it.

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The PR also responded. It did not accept the PD and provided some further comments it wanted me to take into account. Having received the relevant responses from both parties, I’m now finalising my decision. The legal and regulatory context In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R 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 is not necessary to set out that context in detail here. But I would add that the following regulatory rules/guidance are also relevant: The Office of Fair Trading’s Irresponsible Lending Guidance – 31 March 2010 The primary purpose of this guidance was to provide greater clarity for businesses and consumer representatives as to the business practices that the Office of Fair Trading (the ‘OFT’) thought might have constituted irresponsible lending for the purposes of Section 25(2B) of the CCA. Below are the most relevant paragraphs as they were at the relevant time: • Paragraph 2.2 • Paragraph 2.3 • Paragraph 5.5 The OFT’s Guidance for Credit Brokers and Intermediaries - 24 November 2011 The primary purpose of this guidance was to provide clarity for credit brokers and credit intermediaries as to the standards expected of them by the OFT when they dealt with actual or prospective borrowers. Below are the most relevant paragraphs as they were at the relevant time: • Paragraph 2.2 • Paragraph 3.7 • Paragraph 4.8 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 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

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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 PD only relate to the issue of whether the credit relationship between Miss A and FHF was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Miss A 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 those in their response to my PD. Indeed, it hasn’t said it disagrees 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 PD. So, I’ll focus here on the PR’s points raised in response. Section 140A of the CCA: did FHF participate in an unfair credit relationship? The PR has highlighted under Section 140B (9) of the CCA, the burden of proof falls on FHF to disprove the allegation that its relationship with Miss A was unfair. I agree that this is correct, placing a burden on lenders during the process of litigation. That does not mean, though, that FHF – or I – should take a claim at face value. There remains an onus on Miss A to provide some evidence for the claim she is making, despite the overall burden of proof resting with FHF, as was set out in the judgment in Smith and another v Royal Bank of Scotland plc [2023] UKSC 34 at paragraph 40. I also remind both parties that it is my role to make findings on what I consider to be fair and reasonable in all the circumstances of any given complaint. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare regulations In its response to my PD, the PR has reasserted its view that the Supplier marketed the Fractional Club membership to Miss A as an investment and that this was a motivating factor in her decision. I accepted in my PD that the membership may well have been marketed as an investment to Miss A in breach of the prohibition in Regulation 14(3) of the Timeshare Regulations. I also explained that while the Supplier’s sales processes left open the possibility that the sales representative may have positioned Fractional Club membership as an investment, it wasn’t necessary for me 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 response to my PD hasn’t changed my view of this, and so whether the Supplier’s breach of Regulation 14(3) led Miss A to enter into the Purchase Agreement and the Credit Agreement remains an important consideration. In my PD I explained the reasons why I didn’t think any breach of Regulation 14(3) had led Miss A to proceed with her purchase. In short, I was not persuaded that her decision was motivated by the prospect of a financial gain (i.e., a profit). In reaching that view, I took into account the testimony given by Miss A in the course of her complaint. I recognise the PR has interpreted Miss A’s testimony differently to how I have, and I have carefully considered its further comments. Ultimately though, they have not led me to a different conclusion.

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The PR says that I overlooked Miss A’s recollection of the assurance of “money back at the end”, which was a key concern. But I made specific reference to that within my provisional findings on this point. I set out why I didn’t think this spoke to the hope or expectation of a profit. I also thought Miss A was highly motivated by the holiday options that Fractional Club membership offered her. The PR objects to the approach I’ve taken in assessing this aspect of the complaint, believing that I have detracted from the judgment in Shawbrook & BPF v FOS1 and the case law that contributed to it, by requiring Miss A to have been “primarily or mainly motivated” by the investment element in order to uphold the complaint. But I did not make such a finding. I said that, in my view, Miss A was highly motivated by the holiday options offered by the Supplier – which was a factor in my overall conclusion in light of all the available evidence that she would, on balance, have pressed ahead with her purchase of the Fractional Club membership even if there had been a breach of Regulation 14(3) – particularly bearing in mind my separate but related finding that Miss A did not, to my mind, hold a hope or expectation of making a profit through the membership. So for the reasons given in my PD and above, I still do not think that any breach of Regulation 14(3), if there was one, was material to Miss A’s decision to purchase the Fractional Club membership. Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that FHF acted unfairly or unreasonably when it dealt with Miss A’s Section 75 claim, and I am not persuaded that FHF 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 FHF to compensate her. My final decision For the reasons set out above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss A to accept or reject my decision before 28 April 2026. Ben Jennings Ombudsman 1 R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin) (‘Shawbrook & BPF v FOS’).

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