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, Holiday Products, Resale and Exchange Contracts Regulations 2010 complaint against Mitsubishi HC Capital UK Plc trading as Hitachi Personal Finance

Decision detail

Summary

Mr A purchased a Fractional Club timeshare membership for £10,250 in October 2013, financed through a credit agreement with Hitachi Personal Finance. The membership included a share in the net sale proceeds of an Allocated Property. In May 2018, through a professional representative, Mr A complained that the supplier had misrepresented the product as an investment in breach of timeshare regulations, that there was a breach of contract regarding holiday availability, and that the lender was party to an unfair credit relationship. The lender rejected all complaints. The ombudsman found that while the supplier's sales process may have left open the possibility of positioning the membership as an investment, there was insufficient evidence that this was a material factor in Mr A's decision to purchase. The ombudsman concluded that even if a regulatory breach had occurred, it would not render the credit relationship unfair because Mr A would likely have proceeded with the purchase regardless, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering that regulatory breaches do not automatically create unfairness. The key finding was that even if the supplier breached Regulation 14(3) by marketing the timeshare as an investment, this would not render the credit relationship unfair because the prospect of financial gain was not an important and motivating factor in Mr A's decision to purchase. The ombudsman found the Letter of Complaint unreliable as it appeared to be a generic template used in hundreds of similar complaints, not tailored to Mr A's specific circumstances. The ombudsman also rejected allegations of fraudulent misrepresentation, finding insufficient evidence that the sales representative knew or should have known that representations about the property share were untrue. The ombudsman concluded that causation is relevant to Section 140A analysis—if Mr A would have purchased regardless of any breach, the breach cannot render the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website