Not upheld: Section 75 Consumer Credit Act claim handling; undisclosed commission; credit broker authorisation complaint against Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance

Decision detail

Summary

Mr and Mrs C purchased timeshare membership for £10,999 in June 2012, financed by a loan from the Lender in Mr C's name. The Supplier received £1,127.40 commission from the Lender which was not disclosed to Mr C. In June 2019, Mr C claimed the Supplier had made misrepresentations at the time of sale and sought compensation under Section 75 of the Consumer Credit Act, and complained about the undisclosed commission. The Lender rejected both the Section 75 claim and the commission complaint. The ombudsman found the Section 75 claim was time-barred under the Limitation Act 1980 (more than six years after the purchase), and that the undisclosed commission of 10.3% of the loan amount did not constitute actionable breach of fiduciary duty or render the credit relationship unfair under Section 140A, as Mr C would have proceeded with the loan regardless of commission disclosure.

The Ombudsman's reasoning

The ombudsman applied the six-year limitation period under the Limitation Act 1980 to the Section 75 claim, finding it was time-barred when raised in June 2019, seven years after the June 2012 purchase. Regarding commission, the ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles, finding that the 10.3% commission was not 'so high' as to be inherently unfair, the Supplier did not owe a fiduciary duty to Mr C as it was acting as seller not agent, and Mr C would have proceeded with the loan regardless of commission disclosure given his desire for the timeshare and lack of alternative funding. The ombudsman found no breach of regulatory guidance that would independently justify upholding the complaint.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website