Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mrs B purchased a Fractional Club timeshare membership in 2011 for £8,799 using a loan from Novuna Personal Finance. The product included a share in an allocated property's net sale proceeds. In 2018, Mrs B (through a professional representative) complained that the lender had acted unfairly by rejecting a Section 75 claim against the supplier for misrepresentation and by being party to an unfair credit relationship under Section 140A of the Consumer Credit Act 1974. The complaints alleged the supplier had breached Timeshare Regulations by marketing the product as an investment, failed to conduct proper affordability checks, applied unfair contract terms, and that the lender had failed to disclose commission arrangements. The ombudsman found the Section 75 claim was time-barred (more than six years after purchase) and therefore properly rejected. For the Section 140A claim, the ombudsman found that although a breach of the investment marketing prohibition was possible, it was not material because Mrs B's purchase was not motivated by the prospect of financial gain, as evidenced by her failure to raise this issue for over five years. The commission (10.25% of loan amount) was not disproportionate and would not have changed Mrs B's decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically create unfairness (they do not). For the Section 75 claim, the ombudsman found it time-barred under the Limitation Act (six years from date of cause of action, which was the time of sale in 2011). For Section 140A, the ombudsman examined: (1) whether the supplier breached Regulation 14(3) by marketing the timeshare as an investment (found it possible but not determinative); (2) whether such a breach motivated Mrs B's purchase (found it did not, based on the late emergence of this allegation and lack of specificity in Mrs B's testimony); (3) whether the commission arrangement was unfair (found it was not, at 10.25% of loan amount, far lower than the 55% in the Johnson case, and Mrs B would have proceeded regardless); (4) whether information failures rendered the relationship unfair (found they did not, as Mrs B would have made the same decision). The ombudsman rejected the professional representative's arguments about exploitation, noting that Mrs B made an informed choice knowing the costs and benefits.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website