Not upheld: connected lender liability (Section 75 CCA) and unfair credit relationship (Section 140A CCA); alleged misrepresentation and breach of contract by supplier; alleged breach of Timeshare Regulations; undisclosed commission complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Mr C purchased a Fractional Club timeshare membership in January 2013 using a £11,724 loan from Mitsubishi HC Capital UK Plc, with total repayment of £33,132 over 180 months. The membership included a share in an Allocated Property's net sale proceeds. Mr C complained in July 2019 (over six years later) alleging the Supplier misrepresented the product as an investment in breach of Timeshare Regulations, applied unfair pressure, failed affordability checks, and that the Lender failed to disclose commission arrangements. The ombudsman found the Section 75 misrepresentation claim time-barred under the Limitation Act 1980. On the Section 140A unfair credit relationship claim, the ombudsman rejected all grounds, finding Mr C was an experienced timeshare consumer motivated by holiday preferences rather than investment returns, the commission was not disproportionate at 5.48% of credit charge, and any regulatory breaches did not render the relationship unfair given their actual impact on Mr C. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Limitation Act 1980 to find the Section 75 claim time-barred, as the cause of action accrued on 16 January 2013 and the claim was not made until 25 July 2019. Regarding Section 140A, the ombudsman found that even if the Supplier breached Regulation 14(3) by marketing the membership as an investment, Mr C was not motivated by investment prospects but by his long-standing preference for timeshare holidays. The ombudsman rejected arguments about inadequate affordability checks, pressure, unfair contract terms, and insufficient information disclosure, finding none would have prevented the purchase. On commission, the ombudsman distinguished the case from the Supreme Court's Hopcraft decision, noting the commission was only 5.48% of the charge for credit (compared to 55% in Mr Johnson's case), Mr C had pricing information, and the Supplier did not owe a fiduciary duty. The ombudsman concluded regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round with their actual impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website