Not upheld: irresponsible lending; misrepresentation; unfair credit relationship; undisclosed commission; breach of fiduciary duty complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mrs W purchased a Fractional Club timeshare membership in January 2013 for £7,650, financed through a credit agreement with Novuna Personal Finance. The timeshare was asset-backed, including a share in net sale proceeds of an allocated property. Over 5 years later, Mrs W complained that the supplier had misrepresented the product, that the lender was party to an unfair credit relationship, and that the lender failed to disclose a £765 commission payment to the supplier. The ombudsman found no actionable misrepresentation, no breach of contract, and no unfair credit relationship. The ombudsman concluded that even if the supplier breached the prohibition on marketing timeshares as investments, Mrs W's purchase was motivated by desire for holiday accommodation rather than expectation of profit, and the commission amount was not sufficiently high to render the relationship unfair.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A of the CCA, considering whether regulatory breaches automatically create unfairness (they do not). The key reasoning was: (1) no actionable misrepresentation was proven because Mrs W provided insufficient evidence of false statements of existing fact; (2) even if regulation 14(3) was breached (marketing as investment), the evidence showed Mrs W's purchase was not motivated by expectation of profit but by desire for holiday accommodation and asset backing; (3) the commission of £765 (5.48% of charge for credit) was not so high as to render the relationship unfair, particularly given Mrs W understood the cost of credit and had no alternative means to fund the purchase; (4) the supplier did not owe a fiduciary duty to Mrs W when acting as credit broker, as it was not acting as her agent but as seller of contractual rights; (5) regulatory breaches must be assessed for their impact on the complainant, and Mrs W would have proceeded with the purchase regardless.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website