Clydesdale Financial Services Limited · DRN-6243070

The complaint Mr H’s complaint is, in essence, that Clydesdale Financial Services Limited trading as Barclays Partner Finance (‘BPF’) acted unfairly and unreasonably by being party to an unfair credit relationship with him under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’). Background to the Complaint Mr H’s late mother was the member of a timeshare provider (the ‘Supplier’). When she passed away, Mr H inherited his mother’s timeshare membership. He and his sisters utilised the membership to take a short break to one of their mother’s favoured destinations. During their trip, on 28 January 2014 (the ‘Time of Sale’), Mr H purchased his own membership of a timeshare (the ‘Fractional Club’). He exchanged his late mother’s membership and paid an additional £14,455 to buy 16,500 fractional points from the Supplier (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mr H 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. To fund the purchase, Mr H took a loan of £14,455 from BPF (the ‘Credit Agreement’). Mr H – using a professional representative (the ‘PR’) – wrote to BPF on 14 March 2022 (the ‘Letter of Complaint’) to raise a number of different concerns. In summary, it was said that the credit relationship between Mr H and BPF was caused to have been unfair under Section 140A of the CCA because:  Fractional Club membership was marketed and sold to Mr H as an investment in breach of regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (the ‘Timeshare Regulations’).  Mr H was “duped” into purchasing Fractional Club membership by the Supplier. He had been entitled to terminate his late mother’s membership, but he was not told this.  Mr H was vulnerable at the Time of Sale in light of his mother’s recent passing and was not given sufficient time and space by the Supplier to consider his options. As BPF didn’t respond to the complaint within the requisite timeframe, the PR – on Mr H’s behalf – referred it to us. It was assessed by an Investigator who, having considered the information on file, did not recommend that it be upheld. Mr H disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision, so it was passed to me. The legal and regulatory context

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In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is no different to that shared in several hundred 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 here. My provisional decision I issued a provisional decision to both parties earlier this month, setting out why I didn’t intend to uphold the complaint. I said: Having considered the entirety of the credit relationship between Mr H and BPF 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. 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 Mr H and BPF. The Supplier’s sales & marketing practices at the Time of Sale Mr H’s complaint about BPF being party to an unfair credit relationship was made for several reasons. Firstly, it was said in the Letter of Complaint that Fractional Club membership had been misrepresented by the Supplier at the Time of Sale because Mr H was: 1. Told that the Allocated Property would be put up for sale on 31 December 2028 and the return on this sale would generate him a profit, when that was not true. 2. Told that he was investing in a property and that he could use his fractional points until the proposed sale date of the Allocated Property. However, neither point strikes me as a misrepresentation 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 in property 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, that sounds like nothing more than an honestly held opinion. There isn’t enough evidence to persuade me that the Supplier’s sales representative(s) said something that, while an opinion, amounted to a statement

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of fact that they did not hold or could not have reasonably held. It was also said that Mr H was not informed that there was no requirement for him to purchase any additional points and that he could simply hand back his mother’s membership. But it is not said that Mr H actually wanted to do this – or that he expressed such a desire to the Supplier. Rather, the contemporaneous evidence suggests that Mr H and his sisters wanted to continue a membership with the Supplier. Given this, I do not think there was a misrepresentation on the Supplier’s part. This leads me on to the allegation of pressure that was put on Mr H at a time of vulnerability. Naturally I sympathise with the emotional state that Mr H, and his sisters, would have been in at the time – given its proximity to the passing of their late mother, and the connection the family evidently had to the holiday destination they were visiting at the time. I also acknowledge that Mr H may have felt weary after a sales process with the Supplier that went on for a long time, on top of everything else he was dealing with around the time. However, Mr H says little about what was said and/or done by the Supplier during their sales presentation that made him feel as if he had no choice but to purchase Fractional Club membership when he simply did not want to. Moreover, the evidence suggests to me that Mr H and his family had a strong desire to maintain membership with the Supplier. It is notable that this was an agreement between him and his two sisters, thereby involving a level of consideration and agreement between them. This appears to have begun before the Time of Sale, with notes made by the Supplier on and around 15 January 2014, two weeks prior, recording that Mr H had been in touch with queries as to how to transfer the membership into his and his sisters’ names. And having gone ahead with the transfer and purchase, Mr H also had a 14-day cooling off period – so was it not something he had actually wanted to do, he could have cancelled the membership. He has not provided a credible explanation for why he did not do so. With all of that being the case, there is insufficient evidence to demonstrate that Mr H made the decision to purchase Fractional Club membership because his ability to exercise that choice was significantly impaired by pressure from the Supplier or vulnerability in light of his mother’s passing and broader circumstances of the time. Overall, therefore, I don’t think that Mr H’s credit relationship with BPF was rendered unfair to him 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 BPF was unfair to Mr H. And that’s the suggestion that Fractional Club membership was marketed and sold to him as an investment in breach of prohibition against selling timeshares in that way. Was Fractional Club membership marketed and sold at the Time of Sale as an investment in breach of regulation 14(3) 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 Mr H was told by the Supplier that Fractional Club membership was an

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investment that would generate him a profit. 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 Mr H the prospect of a financial return – whether or not, like all investments, that was more than what he first put into it. But it is important to note at this stage that the fact that Fractional Club membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se. In other words, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. To conclude, therefore, that Fractional Club membership was marketed or sold to Mr H as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to him as an investment, i.e. told him or led him to believe that Fractional Club membership offered him the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Time of Sale as an investment in breach of regulation 14(3) of the Timeshare Regulations. On the one hand, it is 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 Mr H, 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 Mr H 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. Was the credit relationship between BPF and Mr H rendered unfair to him? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I now need to consider what impact that breach had on the fairness of the credit relationship between Mr H and BPF 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)

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must be considered in the round, rather than in a narrow or technical way. Indeed, it seems to me that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr H and BPF that was unfair to him and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led him 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 Mr H decided to go ahead with his purchase. That doesn’t mean he 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 I’m not persuaded that his purchase was motivated by a share in the Allocated Property and the possibility of a profit, I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision he ultimately made. As set out above, it seems to me that Mr H was highly motivated to sign up for membership with the Supplier given the family attachment and his – and his sisters’ – desire to continue utilising the holiday options it offered them. Through the upgrade, Mr H acquired a significant number of additional points, with which it appears that he and his siblings could each use for their own holidays – with a further 6,000 points purchased on top of the 10,500 exchanged from their late mother’s membership. Moreover, having considered what Mr H himself has said in his own words, it does not seem to me that he was particularly motivated by the possibility of making a profit from the membership. He recalls, in quite vague terms, the Supplier presenting the membership as “an owned property investment”. But he does not say either what the Supplier led him to believe he might expect by way of return, what he himself understood to be the benefit of investing or indeed that this was a point of particular appeal. In short, he does not say that he purchased the membership with a view to making any money out of it. That the Supplier’s notes from the Time of Sale record that Mr H and his sisters were “all paying for extra (points) so (they) can split holidays” and that Mr H himself recalls the improved “availability and flexibility within booking holidays” further suggest to me that he was motivated to purchase the membership for the holiday options it offered him, and that he would have done so regardless of the fractional ownership element. 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 Mr H’s decision to purchase Fractional Club membership at the Time of Sale was motivated by the prospect of a financial gain (i.e., a profit). On the contrary, I think the evidence suggests he would have pressed ahead with their 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 Mr H and BPF was unfair to him even if the Supplier had breached Regulation 14(3). The provision of information by the Supplier at the Time of Sale The PR says that Mr H was not given sufficient information at the Time of Sale by the Supplier about the ongoing costs of Fractional Club membership. The PR also says that the contractual terms governing the ongoing costs of membership and the consequences of not meeting those costs were unfair contract terms. As I’ve already indicated, the case law on Section 140A makes it clear that it does not

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automatically follow that regulatory breaches create unfairness for the purposes of the unfair relationship provisions. The extent to which such mistakes render a credit relationship unfair must also be determined according to their impact on the complainant. I acknowledge that it is also possible that the Supplier did not give Mr H sufficient information, in good time, on the various charges he could have been subject to as a Fractional Club member in order to satisfy the requirements of Regulation 12 of the Timeshare Regulations (which was concerned with the provision of ‘key information’). But even if that was the case, I cannot see that the ongoing costs of membership were applied unfairly in practice. And as neither Mr H nor the PR have persuaded me that he would not have pressed ahead with the purchase had the finer details of the Fractional Club’s ongoing costs been disclosed by the Supplier in compliance with Regulation 12, I cannot see why any failings in that regard are likely to be material to the outcome of this complaint given its fact and circumstances. As for the PR’s argument that there were one or more unfair contract terms in the Purchase Agreement, I can’t see that any such terms were operated unfairly against Mr H in practice, nor that any such terms led him to behave in a certain way to his detriment. And with that being the case, 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. In conclusion, given the facts and circumstances of the complaint, I was not persuaded that BPF was party to a credit relationship under the Credit Agreement that was unfair to Mr H for the purposes of Section 140A of the CCA. And having taken everything into account, I saw no other reason why it would be fair or reasonable to direct BPF to compensate him. BPF accepted my provisional decision. The PR did not respond. 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 so, and with no new information or evidence for me to consider following my provisional decision, I see no reason to depart from the conclusions I set out therein. So this final decision simply confirms my provisional findings, as set out above. My final decision For the reasons I’ve explained, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr H to accept or reject my decision before 27 April 2026. Ben Jennings Ombudsman

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