Not upheld: unfair credit relationship under section 140A CCA; connected lender liability under section 75 CCA; alleged breach of Timeshare Regulations; alleged undisclosed commission complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance, formerly Hitachi Personal Finance)

Decision detail

Summary

Mr M complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by participating in an unfair credit relationship and refusing to pay a section 75 claim against the timeshare supplier. Mr M had financed a £16,585 Fractional Club membership purchase in April 2016, which included a share in an allocated property's net sale proceeds. The complaint alleged the supplier misrepresented the product as an investment in breach of regulation 14(3) of the Timeshare Regulations, applied pressure during the sales process, failed to conduct proper affordability checks, and that the lender failed to disclose commission arrangements. The ombudsman found no actionable misrepresentation or breach of contract by the supplier, and concluded the credit relationship was not unfair because the prospect of financial gain was not a material motivating factor in Mr M's purchase decision, as evidenced by his failure to use the cooling-off period, his upgrade purchase a year later, and reliability issues with evidence claiming investment motivation. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic assessment of the credit relationship under section 140A of the CCA, considering the supplier's commercial conduct, information provision, evidence of what was said at the time of sale, and inherent probabilities. While acknowledging it was possible the supplier breached regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, the ombudsman found this was not determinative. The key finding was that the prospect of financial gain from the allocated property was not an important motivating factor in Mr M's decision to purchase, as evidenced by: his lack of detailed explanation of pressure tactics; his use of the cooling-off period to consider but not cancel; his upgrade purchase a year later; and the timing and reliability issues with the witness statement claiming investment motivation. The ombudsman rejected the fraudulent misrepresentation allegations, finding that statements about receiving a share of net proceeds were not false statements of fact but rather honest opinions about future property values. Regarding section 75 claims, no actionable misrepresentation or breach of contract by the supplier was established. The commission arrangement, while possibly undisclosed, did not render the relationship unfair given the absence of a fiduciary duty owed by the supplier and the transparency of the credit agreement terms to Mr M.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website