Shawbrook Bank Limited · DRN-6256436

The complaint Mr and Mrs P’s complaint is, in essence, that Shawbrook Bank Limited acted unfairly and unreasonably by (1) being party to an unfair credit relationship with them 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 Mr and Mrs P were members of a timeshare provider (the ‘Supplier’). They purchased a new membership of a timeshare that I’ll call the ‘Fractional Club’ on 25 September 2018 (the ‘Time of Sale’). They entered into an agreement with the Supplier to buy 1,050 fractional points for which they paid, after trading in their existing membership, £7,668 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mr and Mrs P more than just holiday rights. It also included a share in the net sale proceeds of a property named on the Purchase Agreement (the ‘Allocated Property’) after their membership term ends. Mr and Mrs P paid for their Fractional Club membership by taking finance of £7,668 from Shawbrook (the ‘Credit Agreement’). Mr and Mrs P – using a professional representative (‘PR1’) – wrote to Shawbrook on 16 November 2022 (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. Shawbrook dealt with Mr and Mrs P’s concerns as a complaint and issued its final response letter on 4 April 2024, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service, by which time Mr and Mrs P were assisted by a different professional representative (‘PR2’). It was assessed by an Investigator who, having considered the information on file, upheld the complaint on its merits. The Investigator thought that the Supplier had marketed and sold Fractional Club membership as an investment to Mr and Mrs P at the Time of Sale in breach of Regulation 14(3) of the Timeshare Regulations. And given the impact of that breach on their purchasing decision, the Investigator concluded that the credit relationship between Shawbrook and Mr and Mrs P was rendered unfair to them for the purposes of Section 140A of the CCA. Shawbrook 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 have considered all the available evidence and arguments to decide what is fair and reasonable in the circumstances of this complaint. And having done that, I do not think this complaint should be upheld.

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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. 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. Shawbrook doesn’t dispute that the relevant conditions are met. But for reasons I’ll come on to below, it isn’t necessary to make any formal findings on them here. 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 and Mrs P were: 1. Told that they had purchased an investment that would “considerably appreciate in value”. 2. Promised a considerable return on their investment because they were told that they would own a share in a property that would considerably increase in value. 3. Told that they could sell their Fractional Club membership to the Supplier or easily to third parties at a profit. 4. Made to believe that they 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. As for points 3 and 4, while it’s possible that Fractional Club membership was misrepresented at the Time of Sale for one or both of those reasons, I don’t think it’s probable. They’re given little to none of the colour or context necessary to demonstrating that the Supplier made false statements 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 these reasons, I don’t think it was. So, while I recognise that Mr and Mrs P - and their representatives - have concerns about the way in which Fractional Club membership was sold by the Supplier, when looking at the claim under Section 75 of the CCA, I can only consider whether there was a factual and material misrepresentation by the Supplier. For the reasons I’ve set

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out above, I’m not persuaded that there was. And that means that I don’t think that Shawbrook acted unreasonably or unfairly when it dealt with this particular Section 75 claim. Section 140A of the CCA: did Shawbrook 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 Mr and Mrs P and Shawbrook 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 in relation to Fractional Club membership, including the contractual documentation and disclaimers made by the Supplier; 3. The commission arrangements between Shawbrook 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. I have then considered the impact of these on the fairness of the credit relationship between Mr and Mrs P and Shawbrook given their circumstances at the Time of Sale. The Supplier’s sales & marketing practices at the Time of Sale Mr and Mrs P’s complaint about Shawbrook being party to an unfair credit relationship was made for several reasons. When raising the complaint with Shawbrook, PR1 said that the right checks weren’t carried out before Shawbrook lent to Mr and Mrs P. 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 Shawbrook 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 Mr and Mrs P was actually unaffordable before also concluding that they lost out as a result and then consider whether the credit relationship with Shawbrook was unfair to them for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr and Mrs P. Connected to this is the suggestion that the Credit Agreement was arranged by an unauthorised credit broker, the upshot of which is to suggest that Shawbrook wasn’t permitted to enforce the Credit Agreement. However, it looks to me like Mr and Mrs P knew, amongst other things, how much they were borrowing and repaying each

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month, who they were borrowing from and that they were borrowing money to pay for Fractional Club membership. And as the lending doesn’t look like it was unaffordable for them, 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 Mr and Mrs P suffering a financial loss – such that I can say that the credit relationship in question was unfair on them as a result. And with that being the case, I’m not persuaded that it would be fair or reasonable to tell Shawbrook to compensate them, even if the loan wasn’t arranged properly. PR1 also said in the Letter of Complaint 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 Mr and Mrs P in practice, nor that any such terms led them to behave in a certain way to their 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. Overall, therefore, I don’t think that Mr and Mrs P’s credit relationship with Shawbrook was rendered unfair to them under Section 140A for any of the reasons above. But there is another reason, perhaps the main reason, why their representatives say the credit relationship with Shawbrook was unfair to them. And that’s the suggestion that Fractional Club membership was marketed and sold to them 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 Shawbrook does not dispute, and I am satisfied, that Mr and Mrs P’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 Mr and Mrs P’s representatives say that the Supplier did exactly that at the Time of Sale – saying, in summary, that Mr and Mrs P were 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 Mr and Mrs P the prospect of a financial return – whether or not, like all investments, that was more than what they 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.

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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 and Mrs P 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 them as an investment, i.e. told them or led them to believe that Fractional Club membership offered them 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 and Mrs P, 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 and Mrs P 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 Shawbrook and Mr and Mrs P have been rendered unfair to them 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 Mr and Mrs P and Shawbrook 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 Mr and Mrs P and Shawbrook that was unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led them 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 they decided to go ahead with their purchase. That doesn’t mean they weren’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 Mr and Mrs P themselves don’t

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persuade me that their purchase was motivated by their 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 they ultimately made. In reaching this view, I’ve carefully considered what Mr and Mrs P have said in the course of their complaint about how the membership was sold to them and their 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 Mr and Mrs P were told that they had purchased an investment and could expect a profit. 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 PR1 in a number of other complaints. When referring the complaint to us, PR2 included a statement in Mr and Mrs P’s own words setting out their recollections of their purchases from the Supplier. They do not say much about the purchase of the Fractional Club membership at issue, particularly how it was sold to them by the Supplier at the Time of Sale. Much of the statement covers their previous purchase and the background to that, and their unhappiness with the standard of holiday accommodation they experienced. With regard to the sale of the membership at the centre of this complaint, Mr and Mrs P said: “As we became aware that our points allocation wasn’t enough, on one visit to Turkey we upped our commitment and bought more points with another loan as we thought it was the only thing we could do to get any benefit out of our deal.” Prior to the purchase in question, Mr and Mrs P held 1,500 points under an existing fractional club membership but for use on a bi-annual basis. Mr and Mrs P traded this in towards the Fractional Club membership at issue to acquire 1,050 points for use on an annual basis. It is clear to me from what Mr and Mrs P have said that this was the motivating factor for Mr and Mrs P’s decision to proceed with the purchase, and one they would always have made irrespective of the investment element of the membership and how this was promoted to them by the Supplier. While I have noted that Mr and Mrs P recalled being told by the Supplier that their share of the net sale proceeds of the Allocated Property would leave them “with a tidy profit”, this was in reference to the sale of their previous membership. They do not say anything to suggest that the Supplier made such representations at the Time of Sale. In any event, for the reasons explained above I do not think any such representations were material to their purchasing decision. It is also notable that Mr and Mrs P make no reference to increasing their investment by acquiring more points, as I might expect if the prospect of a financial gain was a material factor in their decision. 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 and Mrs P’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 they 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 and Mrs P and Shawbrook was unfair to them even if the Supplier had breached Regulation 14(3).

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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 Mr and Mrs P and Shawbrook under the Credit Agreement and related Purchase Agreement was unfair to them. 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 do not think that Shawbrook acted unfairly or unreasonably when it dealt with Mr and Mrs P’s Section 75 In conclusion, given the facts and circumstances of this complaint, I did not think that Shawbrook acted unfairly or unreasonably when it dealt with Mr and Mrs P’s Section 75 claim, and I was not persuaded that Shawbrook was party to a credit relationship with them under the Credit Agreement that was unfair to them 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 Shawbrook to compensate them. Shawbrook responded to the PD and accepted it. PR2 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 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

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• Principle 7 • Principle 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 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. PR2’s further comments in response to the PD only relate to the issue of whether the credit relationship between Mr and Mrs P and Shawbrook was unfair. In particular, PR2 has provided further comments in relation to whether the membership was sold to Mr and Mrs P as an investment at the Time of Sale. It has also now argued for the first time that the payment of a commission by Shawbrook to the Supplier led to an unfair credit relationship. As outlined in my PD, PR2 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 PR2’s points raised in response. Section 140A of the CCA: did Shawbrook participate in an unfair credit relationship? PR2 has highlighted under Section 140B (9) of the CCA, the burden of proof falls on Shawbrook to disprove the allegation that its relationship with Mr and Mrs P was unfair. I agree that this is correct, placing a burden on lenders during the process of litigation. That does not mean, though, that Shawbrook – or I – should take a claim at face value. There remains an onus on Mr and Mrs P to provide some evidence for the claim they are making, despite the overall burden of proof resting with Shawbrook, 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, PR2 has reasserted its view that the Supplier marketed the Fractional Club membership to Mr and Mrs P as an investment and that this was a motivating factor in their decision. I accepted in my PD that the membership may well have been marketed as an investment to Mr and Mrs P 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

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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. PR2’s response to my PD hasn’t changed my view of this, and so whether the Supplier’s breach of Regulation 14(3) led Mr and Mrs P 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 Mr and Mrs P to proceed with their purchase. In short, I was not persuaded that their 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 Mr and Mrs P in the course of their complaint. I recognise PR2 has interpreted Mr and Mrs P’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. PR2 says that even if the comments from Mr and Mrs P about the prospect of a “tidy profit” relate to the sale of a previous membership (which, for clarity, I believe they do), these should not be discounted as evidence of their motivation behind the purchase in question. In short, because they were led to believe that the membership was a property-backed asset that appreciates (and as such, an investment vehicle), and that increasing their fractional ownership would enhance the value of their investment. I accepted the first of these two points – that Mr and Mrs P may well have been sold the membership at issue as an investment opportunity. And I accept the second in principle – Mr and Mrs P could have considered this further purchase as an opportunity to grow their investment. But they did not say that in their statement. I do not think I can infer it from what they have said – and on the contrary, find its absence to be evidence that this was not how they saw things. I should also say that I cannot attribute any unfairness to Mr and Mrs P’s credit relationship with Shawbrook to anything said by the Supplier during the sale of their previous membership, given that was funded by a loan from a different lender. What Mr and Mrs P did say – the realisation that their points holding wasn’t sufficient to take the holidays they wanted and “get any benefit” out of the membership – still leads me to think that it was the purchase of additional points that motivated Mr and Mrs P and, more importantly, that it did so to such an extent that they would always have proceeded irrespective of the investment element and any promotion of it by the Supplier. I would highlight that the acquisition of more points was the only way Mr and Mrs P saw they could get any benefit out of their membership – which seems to discount (or at least minimise) any appeal of a potential return. PR2 thinks I’ve erred by rejecting the possibility that Mr and Mrs P’s motivation was “multifaceted”. I accept that is possible. And I’ve acknowledged Mr and Mrs P may well have had an interest in holding a share in the Allocated Property. It is just that I do not think this was material to their decision to purchase the membership, as I consider their desire to purchase additional points would always have led them to do so. PR2 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 Mr and Mrs P 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, Mr and Mrs P were highly motivated by the holiday options offered by 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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the Supplier – which was a factor in my overall conclusion in light of all the available evidence that they would, on balance, have pressed ahead with their purchase of the Fractional Club membership even if there had been a breach of Regulation 14(3). 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 Mr and Mrs P’s decision to purchase the Fractional Club membership. The provision of information by the Supplier at the Time of Sale PR2 says that a payment of commission from Shawbrook 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: 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’).

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But I don’t think Hopcraft, Johnson and Wrench assists Mr and Mrs P in arguing that their credit relationship with Shawbrook was unfair to them for reasons relating to commission given the facts and circumstances of this complaint. I haven’t seen anything to suggest that Shawbrook and Supplier were tied to one another contractually or commercially in a way that wasn’t properly disclosed to Mr and Mrs P, 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 Mr and Mrs P into a credit agreement that cost disproportionately more than it otherwise could have. I acknowledge that it’s possible that Shawbrook 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. 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 Shawbrook 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 Mr and Mrs P. Based on what I’ve seen, 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 Mr and Mrs P but as the supplier of contractual rights they 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 them when arranging the Credit Agreement and thus a fiduciary duty. What’s more, in stark contrast to the facts of Mr Johnson’s case, as I understand it, Shawbrook 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 Shawbrook were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to Mr and Mrs P. Overall, therefore, I’m not persuaded that the commission arrangements between the Supplier and Shawbrook were likely to have led to a sufficiently extreme inequality of knowledge that rendered the credit relationship unfair to Mr and Mrs P. 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 Mr and Mrs P and Shawbrook under the Credit Agreement and related Purchase Agreement was unfair to them. So, I don’t think it is fair or reasonable that I uphold this complaint on that basis. I should also note PR2’s argument that the cumulative effect of a number of shortcomings (particularly on the Supplier’s part) – and which, for the most part, I accept may well have occurred – ought to be taken together and deemed to render the credit relationship between Mr and Mrs P and Shawbrook unfair. But having considered each of these individually and

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not found that Mr and Mrs P’s position was prejudiced (and that they would not have acted any differently), I do not think that any greater cumulative impact could or should be ascribed to them. Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that Shawbrook acted unfairly or unreasonably when it dealt with Mr and Mrs P’s Section 75 claim, and I am not persuaded that Shawbrook was party to a credit relationship with them under the Credit Agreement that was unfair to them 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 Shawbrook to compensate them. 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 Mr and Mrs P to accept or reject my decision before 28 April 2026. Ben Jennings Ombudsman

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