Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the CCA; alleged breach of Regulation 14(3) of the Timeshare Regulations; alleged undisclosed commission; alleged unaffordable lending; alleged high-pressure sales tactics complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mrs B complained that Mitsubishi HC Capital UK PLC acted unfairly by being party to an unfair credit relationship and rejecting a Section 75 claim regarding her purchase of Fractional Club timeshare membership financed by a £10,338 loan in July 2017. She alleged the Supplier misrepresented the product as an investment, subjected her to high-pressure sales tactics, failed to provide adequate information, and that the Lender failed to conduct proper affordability checks and failed to disclose commission arrangements. The ombudsman found no actionable misrepresentation, no unfair credit relationship, and no material breach of the Timeshare Regulations affecting the fairness of the relationship. While acknowledging a possible breach of Regulation 14(3), the ombudsman concluded Mrs B was primarily motivated by holiday aspirations and financial incentives offered at the point of sale, not investment prospects, and would have proceeded with the purchase regardless. The affordability assessment was adequate, pressure allegations were unsupported by contemporaneous evidence, and the commission (4%) was not excessive. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier under Section 75 of the CCA, as the allegations lacked sufficient factual detail and supporting evidence. Regarding Section 140A, the ombudsman considered multiple factors including affordability, sales practices, pressure allegations, information provision, and commission arrangements. While acknowledging that the Supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, the ombudsman concluded this was not material to Mrs B's decision. The evidence showed Mrs B was primarily motivated by holiday aspirations and financial incentives offered on the day, not investment prospects. The ombudsman found the affordability assessment adequate, the pressure allegations unsupported by contemporaneous evidence, the cooling off period was properly provided, and the commission (4% of amount borrowed) was not so high as to render the relationship unfair. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, distinguishing the case from Mr Johnson's situation where commission was 55%. The ombudsman noted that Mrs B's own December 2017 letter made no mention of pressure or investment motivation, instead referring to a 'memorable stay' and 'sudden financial changes', which undermined the later allegations made in 2023-2024.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website