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

Decision detail

Summary

Mr Z purchased a Fractional Club timeshare membership in February 2017 for £17,304 (net), financed by a credit agreement of £20,966 from the lender. The timeshare included a share in an allocated property's net sale proceeds. Mr Z complained in May 2020 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 conduct proper affordability checks, and that commission payments to the supplier were undisclosed. The ombudsman found no actionable misrepresentation under Section 75 of the Consumer Credit Act 1974, and concluded that even if the supplier had breached Regulation 14(3), the credit relationship was not unfair under Section 140A because: (1) investment prospects did not materially motivate Mr Z's purchase decision (evidenced by lack of direct testimony despite multiple opportunities); (2) the commission of £190.70 (0.91% of borrowing) was too small to render the relationship unfair; and (3) Mr Z would have proceeded with the purchase regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering that regulatory breaches do not automatically create unfairness. On the Section 75 claim, the ombudsman found no actionable misrepresentation because the prospect of financial gain from the property share was not false. On the Section 140A claim, the ombudsman examined: (1) whether the supplier breached Regulation 14(3) by marketing as an investment - finding it possible but not determinative; (2) whether any breach materially influenced Mr Z's decision - finding no credible evidence that investment prospects motivated the purchase; (3) the commission arrangement - finding it too small (0.91%) to render the relationship unfair compared to the Supreme Court's guidance on high commissions; (4) information provision - finding no material impact on the decision to purchase; and (5) unfair contract terms - finding none operated unfairly in practice. The ombudsman placed significant weight on the absence of direct testimony from Mr Z despite multiple opportunities to provide it, and found the generic Letter of Complaint unreliable as evidence of Mr Z's actual thoughts at the time of sale.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website