Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Mrs A complained that Mitsubishi HC Capital UK Plc acted unfairly by participating in an unfair credit relationship and rejecting a Section 75 claim for misrepresentation relating to her purchase of Fractional Club timeshare membership financed by a £18,307 loan. The complaint alleged the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment and that commission of £732.28 was undisclosed. The ombudsman found that while the Supplier may have breached the investment marketing prohibition, this was not material to Mrs A's decision, as she was motivated by holiday rights rather than investment prospects. The undisclosed commission was found to be too low (4% of borrowing) and insufficiently concealed to render the relationship unfair, particularly given Mrs A's strong desire for the product and lack of alternative means to pay. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the CCA and considered whether the credit relationship was unfair. While acknowledging that the Supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman found this was not material to Mrs A's decision, as the evidence showed she was primarily motivated by holiday rights rather than investment prospects. Regarding the undisclosed commission of £732.28 (4% of borrowing), the ombudsman distinguished the case from the Supreme Court's Hopcraft/Johnson precedent on the basis that: (1) the commission was not high; (2) there was no evidence of a concealed commercial tie or fiduciary duty owed by the Supplier; and (3) Mrs A would have proceeded with the loan regardless of commission disclosure. The ombudsman concluded that regulatory breaches do not automatically render a credit relationship unfair under Section 140A; such breaches must be considered in the round with their actual consequences.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website