Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations 2010; undisclosed commission arrangements complaint against Mitsubishi HC Capital UK Plc trading as Hitachi Personal Finance

Decision detail

Summary

Mr C purchased Fractional Club timeshare membership for £10,894 in January 2014, financed through a credit agreement with Hitachi Personal Finance. The membership included a share in an Allocated Property's net sale proceeds. Mr C complained in May 2018 that the Supplier misrepresented the product, that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974, and that the Lender should be liable under Section 75 for the Supplier's breaches. An Investigator recommended upholding based on an alleged breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments). The Ombudsman found no actionable misrepresentation, no material breach of Regulation 14(3) affecting Mr C's decision, and no unfair credit relationship. The commission of 10% was not excessive, and Mr C would have proceeded with the purchase regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier regarding guaranteed end dates, exclusivity, or release mechanisms. While the Supplier may have breached Regulation 14(3) by marketing the membership as an investment, this was not material to Mr C's decision to purchase, as his primary motivations were holiday usage and the ability to exit without financial loss. The commission of 10% was not excessive compared to the Supreme Court's threshold in Hopcraft, Johnson and Wrench (55%), and Mr C would have proceeded with the purchase even if disclosed. No unfair contract terms were operated unfairly in practice. The credit relationship was not rendered unfair under Section 140A when all factors were considered holistically.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website