Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission; alleged misrepresentation and breach of contract by supplier complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Mrs C complained that Mitsubishi HC Capital UK Plc acted unfairly by participating in an unfair credit relationship and refusing to pay a Section 75 claim regarding her 2013 purchase of a Fractional Club timeshare membership financed through a £8,850 loan. The complaint alleged misrepresentation regarding guaranteed end dates and exclusivity, breach of contract regarding holiday availability, marketing as an investment in breach of Regulation 14(3), undisclosed commission, and pressure selling. The ombudsman found no evidence of actionable misrepresentation or material breach of contract. While acknowledging the possibility of a breach of Regulation 14(3), the ombudsman concluded that Mrs C's purchase was primarily motivated by her established interest in holidaying abroad, not investment prospects, as confirmed by her 2018 questionnaire and long history as a timeshare purchaser. The commission of £862.88 (9.75% of borrowed amount) was not so high as to render the relationship unfair, and allegations of pressure selling were contradicted by Mrs C's own testimony. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier regarding guaranteed end dates, exclusivity, or holiday availability. Regarding the alleged breach of Regulation 14(3) (marketing as investment), while acknowledging the possibility of such a breach, the ombudsman concluded that Mrs C's purchase was motivated primarily by her desire to holiday abroad, not by investment prospects, as evidenced by her long history as a timeshare purchaser and the 2018 questionnaire confirming she was never told of guaranteed profits. The commission arrangement, at 9.75% of the borrowed amount, was not so high as to render the relationship unfair, particularly given Mrs C's full knowledge of the credit terms and her desire for the membership. The ombudsman rejected allegations of pressure selling, noting the two-hour sales process, provision of cooling-off period, and Mrs C's own testimony that she was given time to read documentation and was not detained. Regulatory breaches do not automatically create unfairness under Section 140A; the impact on the complainant must be considered holistically.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website