Not upheld: irresponsible lending, section 75 Consumer Credit Act claim (misrepresentation and breach of contract), undisclosed commission/fiduciary duty breach complaint against Mitsubishi HC Capital UK Plc, trading as Novuna Personal Finance

Decision detail

Summary

Mr S complained that Mitsubishi HC Capital UK Plc (trading as Novuna Personal Finance) lent to him irresponsibly when financing a £16,135 timeshare fractional club membership purchase in January 2019 with a £20,131 loan. He also claimed the lender should have upheld his section 75 Consumer Credit Act claim for misrepresentation and breach of contract by the supplier, and that the lender breached fiduciary duty by failing to disclose commission payments. The ombudsman found the lender conducted appropriate affordability checks showing Mr S could afford the £232.52 monthly payment from his £40,000 annual income; his later financial difficulty resulted from job loss in August 2019, an unpredictable event. No actionable misrepresentation was established, as the PR provided insufficient evidence of false statements of fact regarding the investment. The Supreme Court's Hopcraft judgment confirmed the supplier owed no fiduciary duty, negating the undisclosed commission claim. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding exclusivity or cost savings, as Mr S was informed of maintenance fees and given a cooling-off period. Regarding the investment claim, while fractional membership may have been marketed as an investment, the PR provided no evidence that sales representatives knew or should have known this was false, nor did Mr S provide sufficient detail about specific representations made. The debenture predated the sale and the charge postdated it, so neither could constitute misrepresentation at time of sale. On irresponsible lending, the lender conducted appropriate affordability checks and Mr S could afford the £232.52 monthly payment at time of sale; his later financial difficulty resulted from job loss, an unpredictable event. The Supreme Court's Hopcraft judgment established that the supplier did not owe Mr S a fiduciary duty, so undisclosed commission did not constitute actionable breach.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website