Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 liability for supplier misrepresentation and breach of contract; alleged breach of regulation 14(3) of the Timeshare Regulations; undisclosed commission complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mr E complained that Mitsubishi HC Capital UK PLC (Novuna Personal Finance) acted unfairly by being party to an unfair credit relationship and by rejecting his section 75 claim against the Supplier for misrepresentation and breach of contract. Mr E had purchased Fractional Club timeshare membership for £11,230 on 5 January 2020, financed through a credit agreement. The Supplier allegedly marketed the asset-backed timeshare (which included a share in an allocated property) as an investment in breach of regulation 14(3) of the Timeshare Regulations, and Mr E claimed he could not secure holiday accommodation as promised. The ombudsman found no actionable misrepresentation or breach of contract by the Supplier, and concluded that even if the Supplier had breached regulation 14(3), the credit relationship would not have been unfair because Mr E's purchase was not motivated by the prospect of financial gain. The ombudsman rejected arguments about pressure, unfair contract terms, information failures, and undisclosed commission, finding that Mr E had sufficient information and a 14-day cooling-off period to reconsider his decision.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A, finding that regulatory breaches do not automatically create unfairness. The key finding was that Mr E's purchase was not motivated by the prospect of financial gain from the allocated property, as evidenced by his own witness statement suggesting he viewed the investment as a fallback option if the financial burden became too much. The ombudsman found the commission was low (3.71% of charge for credit) compared to the 55% in the Supreme Court's Johnson case, and that Mr E had sufficient information about the cost of the credit agreement. The ombudsman rejected allegations of fraudulent misrepresentation, finding no evidence that sales representatives knew or should have known that representing the product as an investment opportunity would be false.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website