Not upheld: Section 75 misrepresentation claim (time-barred) and undisclosed commission complaint against Mitsubishi HC Capital UK Plc (trading as Novuna Personal Finance)

Decision detail

Summary

Mr A purchased a Fractional Club timeshare membership in June 2013 financed by a loan from Novuna Personal Finance. In January 2023, he complained that he had been misled about the investment's appreciation potential and resale value, and sought to pursue a Section 75 claim for misrepresentation. He also complained that the credit relationship was unfair due to undisclosed commission of £632.68 paid to the Supplier. The Lender rejected the complaint as time-barred. The ombudsman found the Section 75 claim was made more than six years after the sale, making it time-barred under the Limitation Act 1980, and that Section 32 (fraud and concealment) did not extend the limitation period. The ombudsman also found that the commission, representing only 5.34% of the charge for credit, did not make the relationship unfair, and that the Supplier did not owe Mr A a fiduciary duty. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the Section 75 claim was time-barred under the Limitation Act 1980 because more than six years had elapsed between the date of sale (25 June 2013) and when the claim was first made to the Lender (31 January 2023). Section 32 of the Limitation Act, which deals with fraud and concealment, did not apply because the alleged misrepresentations would have become obvious to Mr A within weeks or months of the purchase. Regarding commission, the ombudsman applied the Supreme Court's judgment in Hopcraft, Johnson and Wrench and found that the commission of 5.34% of the charge for credit was not so high as to make the relationship unfair, there was no evidence of improper commercial ties between the Lender and Supplier, and the Supplier did not owe Mr A a fiduciary duty. Even if regulatory guidance on disclosure had been breached, this would not render the relationship unfair given the modest commission level and the fact that Mr A would have taken out the loan regardless of disclosure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website