Not upheld: Section 75 claim (connected lender liability for misrepresentation/breach of contract) and Section 140A claim (unfair credit relationship) complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Mr H complained that Mitsubishi HC Capital UK Plc acted unfairly by being party to an unfair credit relationship and rejecting a Section 75 claim regarding his 2012 Fractional Club timeshare purchase financed by a £5,999 loan. The ombudsman found the Section 75 claim time-barred under the Limitation Act 1980 as it was brought in July 2018, more than six years after the June 2012 purchase date. Regarding the Section 140A unfair credit relationship claim, the ombudsman concluded it was not upheld because Mr H was an experienced timeshare customer primarily motivated by holiday benefits rather than investment returns, the commission of 5.61% of the charge for credit was not disproportionately high, and any regulatory breaches by the supplier did not render the credit relationship unfair in the circumstances. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found the Section 75 claim was time-barred under the Limitation Act 1980 as it was brought more than six years after the June 2012 purchase date. Regarding Section 140A, the ombudsman concluded the credit relationship was not unfair because: (1) Mr H was an experienced timeshare purchaser who valued the holiday benefits, not primarily motivated by investment returns; (2) the commission of 5.61% of the charge for credit was not disproportionately high compared to the Supreme Court's Hopcraft/Johnson/Wrench precedent; (3) Mr H had full information about the cost of the credit agreement and could compare options; (4) even if the supplier breached Regulation 14(3) by marketing as an investment, this was not material to Mr H's decision to purchase; (5) any regulatory breaches do not automatically render a credit relationship unfair under Section 140A; (6) Mr H did not exercise his 14-day cooling-off period despite his experience with such products.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website