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 Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mr S complained that Mitsubishi HC Capital UK PLC (Novuna Personal Finance) acted unfairly by being party to an unfair credit relationship when financing his purchase of Fractional Club timeshare membership for £12,494 in March 2015, and by rejecting his section 75 claim against the lender for the supplier's alleged misrepresentations and breach of contract. The ombudsman found the section 75 misrepresentation claim was time-barred under the Limitation Act 1980 as it was brought more than six years after the Time of Sale. On the section 140A unfair credit relationship claim, although the ombudsman acknowledged competing evidence that the Fractional Club may have been marketed as an investment in breach of regulation 14(3) of the Timeshare Regulations, this was not material because Mr S's own evidence showed he was not motivated by investment prospects but rather proceeded due to exhaustion from the lengthy sales process. The ombudsman applied established case law principles that regulatory breaches do not automatically create unfairness under section 140A; the impact on the complainant must be considered holistically. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while there was competing evidence about whether the Fractional Club was marketed as an investment in breach of regulation 14(3) of the Timeshare Regulations, any such breach was not material to the outcome because Mr S's purchase was not motivated by the prospect of financial gain. Mr and Mrs S's own evidence indicated they were sceptical and only proceeded due to sales process exhaustion. The ombudsman applied the principle from case law that regulatory breaches do not automatically create unfairness under section 140A; the impact on the complainant must be considered. Since Mr S would likely have proceeded with the purchase regardless of any breach, the credit relationship was not rendered unfair. The section 75 misrepresentation claim was time-barred under the Limitation Act 1980 as it was brought more than six years after the Time of Sale. The alleged breach of contract claim failed on the merits as availability was subject to demand as stated in the documentation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website