Not upheld: Other regulated complaint complaint against Mitsubishi HC Capital UK PLC

Decision detail

Summary

Mrs N purchased a Signature Collection timeshare membership for £11,703 in July 2019, financed through a credit agreement with Mitsubishi HC Capital UK PLC. The membership included fractional holiday points and a share in the net sale proceeds of an allocated property. In January 2024, Mrs N complained through a professional representative, alleging that the supplier had misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that the lender had failed to properly handle a Section 75 claim, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found that the representations about the investment nature of the product were not factually untrue, that Mrs N's purchase was not motivated by the prospect of financial gain (making any regulatory breach immaterial), and that the undisclosed commission of 3.71% of the charge for credit was not high enough to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether the credit relationship was unfair in all the circumstances rather than treating regulatory breaches as automatically creating unfairness. The key reasoning was: (1) regarding Section 75 misrepresentation claims, telling prospective members that Signature Collection membership was an investment was not factually untrue as it included a share in an allocated property which constituted an investment; (2) regarding alleged breach of contract, availability of holiday accommodation was subject to demand as stated in the sales paperwork and Mrs N did use her fractional points on multiple occasions; (3) regarding Section 140A, even if the supplier breached Regulation 14(3) by marketing the product as an investment, this would not have rendered the credit relationship unfair because Mrs N's purchase was not motivated by the prospect of financial gain - her testimony was given 4 years after the sale and after the Shawbrook judgment, creating a high risk of external influence; (4) regarding commission, at 3.71% of the charge for credit, the commission was not high enough to render the relationship unfair, particularly as Mrs N was provided with clear pricing information and had no alternative means to fund the purchase she wanted; (5) the supplier's role as credit broker was not separate from its role as seller and did not create a fiduciary duty to Mrs N.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website