Upheld: unfair credit relationship; breach of Timeshare Regulations (Regulation 14(3)); marketing and selling timeshare as investment complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mrs P complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by being party to an unfair credit relationship and by refusing to pay a Section 75 claim. Mrs P and Mr P purchased a Fractional Club timeshare membership on 31 December 2017 for £15,618, financed through a credit agreement in Mrs P's sole name. The membership included fractional points and a share in the net sale proceeds of an Allocated Property. Mrs P alleged that the Supplier marketed and sold the membership as an investment opportunity, stating they were told it would increase in value and could be sold back after 3 years for at least the same cost or more. The Ombudsman found that the Supplier's training material and sales practices breached Regulation 14(3) of the Timeshare Regulations by presenting the membership as an investment with financial returns, and that this breach was material to Mr and Mrs P's purchasing decision. The Ombudsman upheld the complaint and directed the Lender to refund Mrs P's repayments, management charges, and the trade-in value of her trial membership, less the value of holidays taken and promotional giveaways, plus 8% simple interest, and to remove adverse credit file information.

The Ombudsman's reasoning

The Ombudsman found that the Supplier breached Regulation 14(3) by marketing and selling the Fractional Club membership as an investment. The training material encouraged sales representatives to emphasize ownership of physical property, financial returns at the end of the membership term, and comparisons showing financial advantages over renting holidays. While disclaimers were included in the contractual paperwork, these were provided after the sales presentation and after Mr and Mrs P had agreed to purchase. The Ombudsman found that Mr and Mrs P's testimony, despite being written over 7 years after the sale, contained a core of acceptable evidence and was plausible given the circumstances. The prospect of financial gain was material to their decision to purchase, as evidenced by their statement that they were looking for an investment opportunity and understood that holding the membership longer would increase profits. The Ombudsman concluded that the Supplier's breach of Regulation 14(3) rendered the credit relationship between Mrs P and the Lender unfair under Section 140A of the CCA.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website