Not upheld: connected lender liability (Section 75 CCA); unfair credit relationship (Section 140A CCA); alleged breach of Timeshare Regulations 2010 Regulation 14(3); undisclosed commission; misrepresentation and breach of contract complaint against Mitsubishi HC Capital UK PLC trading as Novuna

Decision detail

Summary

Mr A purchased a Fractional Club timeshare membership in February 2018 for £16,513 financed by a loan from Mitsubishi HC Capital UK PLC (Novuna). The membership included a share of net sale proceeds of an allocated property after 2035. Mr A complained in April 2024 (over six years later) alleging misrepresentation, breach of contract, unfair marketing as an investment in breach of Timeshare Regulations 2010, undisclosed commission, and an unfair credit relationship. The ombudsman rejected the complaint on two grounds: first, the Section 75 claim was time-barred under the Limitation Act 1980 as it was not raised within six years of the purchase; second, the credit relationship was not unfair under Section 140A because Mr A was not motivated by investment prospects (despite possible regulatory breach) and the commission of 3.71% of the charge for credit was not disproportionately high. The ombudsman exercised caution regarding the witness statement due to its poor provenance and the substantial delay in raising complaints.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. First, the Section 75 claim was rejected as time-barred under the Limitation Act 1980, as the cause of action accrued on 14 February 2018 and the claim was not made until 25 April 2024 (over six years later). Section 32 of the Limitation Act did not apply as Mr A had obvious grounds to complain immediately after purchase. Second, regarding Section 140A unfairness, the ombudsman found: (1) no evidence that Mr A was motivated to purchase by investment prospects, despite possible breach of Regulation 14(3) prohibiting marketing timeshares as investments; (2) the commission of 3.71% of charge for credit was not disproportionately high compared to the Supreme Court's guidance (contrasting with 55% in Johnson's case); (3) Mr A was provided with pricing information and could compare options; (4) the Supplier did not owe a fiduciary duty to Mr A; (5) regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round with their actual impact; (6) the debenture, if unknown, would not have been material to Mr A's decision as the investment element was not his motivating factor. The ombudsman exercised caution regarding the witness statement due to its poor provenance (undated, unsigned, produced six years after the sale and after influential court judgments on timeshare complaints).

How this compares

Source

Read the original decision on the Financial Ombudsman Service website