Shawbrook Bank Limited · DRN-6260879

The Complaint Mr and Mrs C’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) 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 claims under Section 75 of the CCA. What happened Mr and Mrs C were existing members of the timeshare provider (‘the Supplier’) having purchased various products from it over time. For the purposes of this decision, I think it’s important to set out Mr and Mrs C’s purchases as follows as I will refer to these in my provisional decision later: • In November 2015, Mr and Mrs C purchased a Fractional Club membership. • In October 2016, Mr and Mrs C purchased a Signature Collection membership • In October 2017, Mr and Mrs purchased a further Signature Collection membership All of these three purchases set out above were funded with a loan from a different finance provider (‘Business A’).1 On 22 May 2018 (the ‘Time of Sale’), Mr and Mrs purchased another Signature Collection membership. They entered into an agreement with the Supplier to buy 1,420 Fractional points at a cost of £14,494 (the ‘Purchase Agreement’). Mr and Mrs C paid £14,494 for their Signature Collection membership which they funded by taking finance from the Lender (the ‘Credit Agreement’). Like Fractional Club membership, Signature Collection membership was also asset backed – which meant it gave Mr and Mrs C more than just holiday rights. It also included a share in the net sale proceeds of a property named on their Purchase Agreement (the ‘Allocated Property’) after their membership term ends. Mr and Mrs C – using a professional representative (the ‘PR’) – wrote to the Lender on 15 May 2024 (the ‘Letter of Complaint’) to raise a number of different concerns. As 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. The Lender dealt with Mr and Mrs C’s concerns as a complaint and issued its final response letter on 29 May 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. 1 Complaints were made regarding all three purchases which were upheld by Investigators at our Service, and compensation was paid by Business A to Mr and Mrs C in relation to all three loans.

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Mr and Mrs C disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me. The provisional decision Having considered all of the evidence that had been submitted, I thought that the complaint ought to be upheld. As I had reached a different outcome than the Investigator, I set out my initial thoughts in a provisional decision (the ‘PD’) and invited both sides to submit any new evidence or arguments that they wished me to consider before I finalised my decision. In the PD 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 currently think that this complaint should be upheld because the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing and/or selling Signature Collection membership to Mr and Mrs C as an investment, which, in the circumstances of this complaint, rendered the credit relationship between them and the Lender unfair to them for the purposes of Section 140A of the CCA. However, before I explain why, I want to make it clear that my role as an Ombudsman 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, while I recognise that there are a number of aspects to this complaint, it is not necessary to make formal findings on all of them because, even if one or more of those aspects ought to succeed, the redress I am currently proposing puts Mr and Mrs C in the same or a better position than they would otherwise be in. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? Having considered the entirety of the credit relationship between Mr and Mrs C and the Lender along with all of the circumstances of the complaint, I think the credit relationship between them was likely to have been rendered unfair for the purposes of Section 140A. When coming to that conclusion, and in carrying out my analysis, I have looked at: 1. The Supplier’s sales and marketing practices at the Time of Sale – which includes training material that I think is likely to be relevant to the sale; 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; and 4. The inherent probabilities of the sale given its circumstances. I have then considered the impact of these on the fairness of the credit relationship between Mr and Mrs C and the Lender. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations The Lender does not dispute, and I am satisfied, that Mr and Mrs C’s Signature Collection membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations.

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Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Signature Collection 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 C say that the Supplier did exactly that at the Time of Sale – saying, in summary, that they were told by the Supplier that Signature Collection membership was the type of investment that would lead to a financial gain. 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. Mr and Mrs C’s share in the Allocated Property clearly constituted an investment as it offered them 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 Signature Collection 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 Signature Collection. They just regulated how such products were marketed and sold. To conclude, therefore, that Signature Collection membership was marketed or sold to Mr and Mrs C 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 Signature Collection membership offered them the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is evidence in this complaint that the Supplier made efforts to avoid specifically describing membership of the Signature Collection as an ‘investment’ or quantifying to prospective purchasers, such as Mr and Mrs C, 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. There were, for instance, disclaimers in the contemporaneous paperwork that state that Signature Collection membership was not sold to Mr and Mrs C as an investment. However, weighing up what happened in practice is, in my view, rarely as simple as looking at the contemporaneous paperwork. And for reasons I’ll now come on to, given the facts and circumstances of this complaint, I think the Supplier is likely to have breached Regulation 14(3) of the Timeshare Regulations. How the Supplier marketed and sold the Signature Collection membership During the course of the Financial Ombudsman Service’s work on complaints about the sale of timeshares, the Supplier has provided training material document called “2015 SPAIN FRACTIONALS AT SIGNATURE SUITE COLLECTION SALES TRAINING MANUAL FOR FPOC AND VACATION CLUB OWNERS” (‘the Manual’) used to train its

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sales agents in the selling of the product purchased by Mr and Mrs C. As I understand it, the Manual was in use at the time Mr and Mrs C made their purchase. It’s not entirely clear whether they would have been shown the slides included in the Manual, but it seems to me to be reasonably indicative of: (1) the training the Supplier’s sales agents would have got before selling Mr and Mrs C’s Signature membership; and (2) how the sales agents would have framed the sale of the Signature membership to them. Having looked through the Manual, I am first drawn to the slide on page 11, which is the first slide that brings in the Signature membership and its purpose. It says: “When our members asked if they could buy a [Supplier] property in its entirety, we developed [Supplier] Estates which has been tremendously successful and has now sold over 2000 properties all around the world. In recent years our members requested shorter term products so to fulfil that demand we created our Fractional Property Owners Club which is a shorter-term product with a fixed asset attached providing an exit in 19 years and money back.” This slide strongly suggests the sales agent is likely to have made the point to the customer that purchasing the membership would allow them to own a physical asset, that being the fraction of a real property, and that this ownership would lead to “money back” at the end of the term. From the off, therefore, it seems likely that the sales agent would have demonstrated that there was a significant financial advantage to gaining the membership that set it apart from membership of a ‘standard’ timeshare that only provided customers with holiday rights. I’ve then considered the slides copied below, which are found on page 106: These slides appear in a part of the presentation titled “In House Game Plan for Vacation Club Owners”. Mr and Mrs C were not a Vacation Club Owner at the Time of Sale but were existing Signature Collection members, so I don’t think these actual slides were shown to them. But I do think slides are indicative of the sales practices by the Supplier at that time. And this includes the Supplier’s use of the word “investment” to describe Signature membership. So, although I accept this part of the slide deck was probably not shown to Mr and Mrs C at the Time of Sale, I think it was likely that the Supplier’s sales staff would have been trained to talk about Signature memberships like Mr and Mrs C as investments. That

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means there was a real possibility that was done when the membership was sold to Mr and Mrs C at the Time of Sale. And I find Mr and Mrs C’s recollection of being told that they would make a bigger profit by upgrading and purchasing more points to be plausible. I acknowledge that there may not have been a comparison between the expected level of financial return and the purchase price of Signature membership. However, if I were to only concern myself with express efforts to quantify to Mr and Mrs C the financial value of the proprietary interest they were offered, I think that would involve taking too narrow a view of the prohibition against marketing and selling timeshares as an investment in Regulation 14(3). I think it would be helpful to repeat what the Government said about what marketing or selling a timeshare as an investment might look like – saying that ‘[a] trader must not market or sell a timeshare or [long-term] holiday product as an investment. For example, there should not be any inference that the cost of the contract would be recoupable at a profit in the future (see regulation 14(3)).”2 And in my view that must have been correct because it would defeat the consumer-protection purpose of Regulation 14(3) if the concepts of marketing and selling a timeshare as an investment were interpreted too restrictively. So, if a supplier implied to consumers that future financial returns (in the sense of possible profits) from a timeshare were a good reason to purchase it, I think its conduct was likely to have fallen foul of the prohibition against marketing or selling the product as an investment. Indeed, if I’m wrong about that, I find it difficult to explain why, in paragraphs 77 and 78 followed by 99 and 100 of Shawbrook & BPF v FOS when, Mrs Justice Collins Rice said the following: “[…] I endorse the observation made by Mr Jaffey KC, Counsel for BPF, that, whatever the position in principle, it is apparently a major challenge in practice for timeshare companies to market fractional ownership timeshares consistently with Reg.14(3). […] Getting the governance principles and paperwork right may not be quite enough. The problem comes back to the difficulty in articulating the intrinsic benefit of fractional ownership over any other timeshare from an individual consumer perspective. […] If it is not a prospect of getting more back from the ultimate proceeds of sale than the fractional ownership cost in the first place, what exactly is the benefit? […] What the interim use or value to a consumer is of a prospective share in the proceeds of a postponed sale of a property owned by a timeshare company – one they have no right to stay in meanwhile – is persistently elusive.” “[...] although the point is more latent in the first decision than in the second, it is clear that both ombudsmen viewed fractional ownership timeshares – simply by virtue of the interest they confer in the sale proceeds of real property unattached to any right to stay in it, and the prospect they undoubtedly hold out of at least 'something back' – as products which are inherently dangerous for consumers. It is a concern that, however scrupulously a fractional ownership timeshare is marketed otherwise, its offer of a 'bonus' property right and a 'return' of (if not on) cash at the end of a moderate term of years may well taste and feel like an investment to consumers who are putting money, loyalty, hope and desire into their purchase anyway. Any timeshare contract is a promise, or at the very least a prospect, of long-term delight. [...] A timeshare-plus contract suggests a prospect of happiness-plus. And a timeshare plus 'property rights' and 'money back' suggests adding the 2 The Department for Business Innovation & Skills “Consultation on Implementation of EU Directive 2008/122/EC on Timeshare, Long-Term Holiday Products, Resale and Exchange Contracts (July 2010)”. https://assets.publishing.service.gov.uk/media/5a78d54ded915d0422065b2a/10-500-consultation-directive-timeshare- holiday.pdf

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gold of solidity and lasting value to the silver of transient holiday joy.” (Emphasis is my own.) And the investment element of the Signature membership was plainly a major part of its rationale and justification for its cost. And as it was designed to offer its members a way of making a financial return from the money they invested – whether or not, like every investment, the return was more, less or the same as the sum invested - it would not have made much sense if the Supplier included the feature in the product without relying on it to promote sales, especially when the reality was that the principal benefit of the Signature membership was its investment element i.e., the share in the net sale proceeds of the allocated property named in the Purchase Agreement. Having considered the training materials I’ve seen from the Supplier in the round, I note that there does not appear to be any attempt to minimise or explicitly reject the notion that the Signature membership contained an investment element. Nor have I seen anything that contradicts or clashes with what Mr and Mrs C have said about the way the membership was sold to them. Given this, I think it’s more likely than not that the Supplier did, at the very least, imply that future financial returns (in the sense of possible profits) from the membership was a good reason to purchase it. In the circumstances of this complaint, although the Lender isn’t responsible for the sale of Mr and Mrs C’s previous agreements, I think it is fair for me to consider what they say they were told when they purchased their previous Fractional Club and Signature Collection memberships as that is likely to have set the tone for this subsequent Signature Collection purchase. When Mr and Mrs C initially purchased their Fractional Club membership, they say: “We were advised that investing in fractional points, we would be investing in property that after 19 years, we would be able to sell these back to [Supplier] and make our money back plus more.” When Mr and Mrs C purchased their first Signature Collection membership, they said: “At this meeting, the representatives informed us of the benefits of purchasing more fractional points adding to our investment and the further benefits this would bring us. This included better availability of booking holidays, higher standard of apartments that would have a higher chance of selling which would allow us to make more of a profit. The representatives promised that the more points we had, the more options we would have.” Turning to their further purchase in October 2017, Mr and Mrs C say: “This is when the representatives informed us of the Signature Suites that [Supplier] had that was the highest spec of property they had to offer which purchasing more fractional points, would allow us to have this property which would be a further boost to our investment and would allow us to make more of a profit when selling after the 19 years.” As I’ve previously said, none of these purchases form the subject of this complaint, but bearing in mind what they’ve said about the way their previous memberships were sold and/or marketed to them, I think it is likely that, on the balance of probabilities, the Supplier’s sales representative was likely to have led Mr and Mrs C to believe that their Signature Collection membership would further boost their investment providing a larger profit in the future. Given everything, I have seen so far I think that is likely to be what Mr and Mrs C were led to believe by the Supplier at the relevant time. And for that reason, I think the Supplier breached Regulation 14(3) of the Timeshare Regulations.

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Was the credit relationship between the Lender and the Consumer rendered unfair? Having found 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 C and the Lender under the Credit Agreement and related Purchase Agreement as the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. Indeed, it seems to that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr and Mrs C and the Lender 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. On my reading of Mr and Mrs C’s testimony, the prospect of a financial gain from Signature Collection membership was an important and motivating factor when they decided to go ahead with their purchase. Thinking about Mr and Mrs C’s history with the Supplier, they made multiple purchases, which they believed would result in them making a profit. I don’t find it either implausible or hard to believe Mr and Mrs C say: “We were advised that if we were to upgrade to more points this would boost our investment and would allow more of a profit to be made when selling.” That doesn’t mean they were not interested in holidays, their own testimony demonstrates that they quite clearly were. And that is not surprising given the nature of the product at the centre of this complaint. But as Mr and Mrs C says (plausibly in my view) that Signature Collection membership was marketed and sold to them at the Time of Sale as something that offered them more than just holiday rights, on the balance of probabilities, I think their purchase was motivated by their share in the Allocated Property and the possibility of a profit as that share was one of the defining features of membership that marked it apart from the more ‘standard’ type of timeshare available to them. And with that being the case, I think the Supplier’s breach of Regulation 14(3) was material to the decision they ultimately made. As I mentioned earlier, I’m conscious there were disclaimers contained in the contractual paperwork that set out the membership should not be looked at as a financial investment and it’s likely Mr and Mrs C would have signed to say they had read and understood that. But, these disclaimers were contained in documents given to Mr and Mrs C after the sales presentation and after they had, in my opinion, agreed to make the purchase on the basis of the presentation and what they had been told by the Supplier. Considering Mr and Mrs C went into the sales presentation of their Signature Collection membership believing he already held an investment type product, I don’t think the disclaimers would have done much to dissuade Mr and Mrs C from thinking that the Signature Collection membership was not an investment. Mr and Mrs C have not said or suggested, for example, that they would have pressed ahead with the purchase in question had the Supplier not led them to believe that Signature Collection membership was an appealing investment opportunity. And as they faced the prospect of borrowing and repaying a substantial sum of money while subjecting themselves to long-term financial commitments, had they not been encouraged by the prospect of a financial gain from membership of the Signature Collection membership, I’m not persuaded that they would have pressed ahead with their purchase regardless.

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Conclusion Given the facts and circumstances of this complaint, I think the Lender participated in and perpetuated an unfair credit relationship with Mr and Mrs C under the Credit Agreement and related Purchase Agreement for the purposes of Section 140A. And with that being the case, taking everything into account, I think it is fair and reasonable that I uphold this complaint. The responses to the provisional decision Mr and Mrs C accepted my provisional outcome with no further comment. The Lender also responded and said while it did not intend to challenge the outcome, it had some comments it wished to make. As the deadline for further submissions has now passed, the matter has come back to me for further consideration. 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. And having done so, and having considered everything again in light of both sides’ responses to the PD, I see no reason to depart from the outcome reached in the provisional decision. I remain satisfied that this complaint ought to be upheld, but I will address the concerns raised by the Lender in its response to the PD. The Lender thought that the PD was premised on a material error of law in its approach to the prohibition under Regulation 14(3) of the Timeshare Regulations. It said the PD had said that the mere existence of the ‘prospect of a financial return’ constituted an ‘investment’, and in doing so falls into error by conflating two meanings of the word ‘return’: (i) a ‘return on investment’, which is normally understood to mean the measure of profit (the return) on the original investment; and (ii) a customer being told that some money will be ‘returned’ upon sale, which carries no connotation of financial gain/profit. The Lender said that the former is what must not be marketed under the Timeshare Regulations; and the latter is an inherent feature of fractional products and does not breach Regulation 14(3). But I don’t think the Lender has understood the point that was being made here. In the PD I set out what Regulation 14(3) said: “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.” And then I set out the definition of the word ‘investment’ I was using: “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.” But the Signature Collection membership was asset-backed by an Allocated Property, and the share in the property clearly constituted an investment as it offered the member the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But there was no conflation of the word ‘return’ because I made it clear

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that the fact that the fractional membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se. So, the Timeshare Regulations did not ban products such as the Signature Collection membership. They just regulated how such products were marketed and sold. The Lender also thought that I had dismissed the disclaimers contained in the contractual paperwork with no proper basis or explanation within my PD, despite observing that they emphasised that the products should not be seen as an investment, and had been signed by Mr and Mrs C. It said that the disclaimers had been found to evidence compliance with Regulation 14(3). And I agreed with the Lender to the extent that the disclaimers did set out that the membership should not be looked at as a financial investment, and Mr and Mrs C signed to say they had read and understood that. But these disclaimers were contained in documents which were given to Mr and Mrs C to sign after they had been through the sales presentation, and after they had agreed to make the purchase on the basis of the presentation and what they had been told by the Supplier. And as I set out, that presentation suggested that the membership could lead to a financial gain (i.e. a profit) from the sale of the associated Allocated Property(s). So, I think it unlikely that, having made a decision to purchase on the basis of what they had seen and heard, the disclaimers would have done much to dissuade Mr and Mrs C from thinking that the membership was an investment. It is also ultimately difficult to explain why it was necessary to include such disclaimers if there wasn’t a very real risk of the Supplier marketing and selling membership as an investment, given the difficulty of articulating the benefit of fractional ownership in a way that distinguishes it from other timeshares from the viewpoint of prospective members. The Lender said that the wrong test had been applied to determine whether the credit relationship between it and Mr and Mrs C was unfair. It then quoted the following: “In the PD, at page 8, the Ombudsman appears to have adopted a different test than that of cited in Carney, She states “I think their purchase was motivated by their share in the Allocated Property and the possibility of a profit... And with that being the case, I think the Supplier’s breach of Regulation 14(3) was material to the decisions they ultimately made”. It said that this appears to reverse the burden of proof, in that I had appeared to start from the position that the prospect of a financial gain existed, but this was not insignificant enough for it not to render the relationship unfair. It said the starting point is to assess whether there is sufficient evidence of a material impact on the decision to enter the agreement. The Lender thought that in the absence of this evidence, the relationship ought not to be found unfair. But the Lender appears to have misunderstood what I had said. The burden of proof has not been reversed here. It is clear that it was on the basis that the Supplier’s breach of Regulation 14(3) at the Time of Sale was material to their purchasing decision that I decided that the associated credit relationship had been rendered unfair. So, I am satisfied, as I set out in the PD, that Mr and Mrs C were motivated to make their Signature Collection membership purchase because of the associated shares in the Allocated Property and the possibility of a profit. And because of that, the breach of Regulation 14(3) by the Supplier was material to the purchasing decision they ultimately made.

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The Lender then concluded by saying that the reliance on the witness testimony was unsafe. It thought this because the testimony contained vague and brief allegations, as well as being inconsistent and generic. It said it would have expected there to have been information about what Mr and Mrs C were told about the likely return or mechanisms of how the agreement works, which has not been mentioned. The allegation’s credibility, that the product was sold as an investment, has not been challenged. I don’t agree that Mr and Mrs C’s testimony around the investment element of their membership is vague and brief. As I considered in my PD, Mr and Mrs C set out what they were told about the prospect of a financial gain from purchasing their Signature Collection membership and having considered what they said, I’m persuaded the investment element was an important and motivating factor when they decided to go ahead with their purchase. Having reconsidered everything again, I remain satisfied that it is safe to place weight on Mr and Mrs C’s testimony when considering what most likely happened at the Time of Sale. And I find that their testimony, when considered alongside all of the evidence and circumstances, persuades me that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, and that breach was material to Mr and Mrs C’s purchasing decision. Conclusion So, although the Lender has said it would not challenge my provisional decision that this complaint ought to be upheld, I have considered everything that it has said in response. And having done so, I remain satisfied that this complaint ought to be upheld. I think the Lender participated in and perpetuated an unfair credit relationship with Mr and Mrs C under the Credit Agreement and related Purchase Agreement for the purposes of Section 140A. Putting things right In the PD I set out what I considered to be a fair and reasonable way for the Lender to calculate and pay fair compensation to Mr and Mrs C. Neither side has made any comment on my proposed redress, so I see no reason to depart from my provisional thoughts on this issue. Fair Compensation For the avoidance of doubt, I shall set out my directions below. Having found that Mr and Mrs C would not have agreed to purchase Signature Collection membership at the Time of Sale were it not for the breach of Regulation 14(3) of the Timeshare Regulations by the Supplier (as deemed agent for the Lender), and the impact of that breach meaning that, in my view, the relationship between the Lender and the Consumer was unfair under Section 140A of the CCA, I think it would be fair and reasonable to put them back in the position they would have been in had they not purchased Signature Collection membership (i.e., not entered into the Purchase Agreement), and therefore not entered into the Credit Agreement, provided Mr and Mrs C agree to assign to the Lender their Fractional Points or hold them on trust for the Lender if that can be achieved. Here’s what I think needs to be done to compensate Mr and Mrs C with that being the case – whether or not a court would award such compensation: (1) The Lender should refund Mr and Mrs C’s repayments to it under the Credit Agreement, including any sums paid to settle the debt, and cancel any outstanding balance if there is one.

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(2) In addition to (1), the Lender should also refund the annual management charges Mr and Mrs C paid as a result of Signature Collection membership. (3) The Lender can deduct: i. The value of any promotional giveaways that Mr and Mrs C used or took advantage of; and ii. The market value of the holidays* Mr and Mrs C took using their Fractional Points. (I’ll refer to the output of steps 1 to 3 as the ‘Net Repayments’ hereafter) (4) Simple interest** at 8% per annum should be added to each of the Net Repayments from the date each one was made until the date the Lender settles this complaint. (5) The Lender should remove any adverse information recorded on Mr and Mrs C’s credit files in connection with the Credit Agreement reported within six years of this decision. (6) If Mr and Mrs C’s Signature Collection membership is still in place at the time of this decision, as long as they agree to hold the benefit of their interest in the Allocated Property for the Lender (or assign it to the Lender if that can be achieved), the Lender must indemnify them against all ongoing liabilities as a result of their Signature Collection membership. *I recognise that it can be difficult to reasonably and reliably determine the market value of holidays when they were taken a long time ago and might not have been available on the open market. So, if it isn’t practical or possible to determine the market value of the holidays Mr and Mrs C took using their Fractional Points, deducting the relevant annual management charges (that correspond to the year(s) in which one or more holidays were taken) payable under the Purchase Agreement seems to me to be a practical and proportionate alternative in order to reasonably reflect their usage. **HM Revenue & Customs may require the Lender to take off tax from this interest. If that’s the case, the Lender must give the consumer a certificate showing how much tax it’s taken off if they ask for one. My final decision I uphold this complaint and direct Shawbrook Bank Limited to calculate and pay fair compensation to Mr and Mrs C as set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr and Mrs C to accept or reject my decision before 27 April 2026. Sameena Ali Ombudsman

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