Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mrs N complained that Novuna acted unfairly by being party to an unfair credit relationship and rejecting her Section 75 claim against the supplier for misrepresentation and breach of contract relating to Fractional Club timeshare membership purchased in March 2018. The timeshare included a share in an allocated property's net sale proceeds. The ombudsman found no actionable misrepresentation because the investment element was genuine, no breach of contract because membership rights remained intact, and no unfair credit relationship even if the supplier had breached Regulation 14(3) by marketing as an investment, because the evidence did not show Mrs N's purchase was motivated by investment prospects. The ombudsman rejected arguments about undisclosed commission (£176.75, representing 0.91% of the loan) as the amount was minimal and would not have deterred the purchase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation because the share in the allocated property constituted a genuine investment offering prospect of financial return, and presenting it as such did not breach Regulation 14(3). Regarding the breach of contract claim, there was no evidence that Mrs N and Mr N were no longer members, unable to use membership, or denied their share in net proceeds. On the Section 140A unfair credit relationship claim, even if the supplier had breached Regulation 14(3) by marketing as an investment, this would not render the credit relationship unfair because the evidence did not support that Mrs N's purchase decision was motivated by prospect of financial gain. The ombudsman noted Mr N's statement was provided very late (December 2023, after the Shawbrook judgment), raising reliability concerns. The prior purchase of trial membership suggested genuine interest in holiday options rather than investment motivation. The commission payment was minimal (0.91% of loan) and did not create the extreme inequality of knowledge seen in comparable cases. Regulatory breaches do not automatically create unfairness under Section 140A; the impact must be considered holistically.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website