Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; rejection of Section 75 claim; alleged breach of Regulation 14(3) of the Timeshare Regulations complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mrs T complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by being party to an unfair credit relationship and by rejecting her Section 75 claim regarding a £9,039 loan used to purchase Fractional Club timeshare membership in July 2012. The timeshare was asset-backed, including a share in property proceeds, which constituted an investment element. Mrs T alleged the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment. The ombudsman found the Section 75 claim was time-barred under the Limitation Act 1980, as it was made in October 2022, over six years after the purchase date. Regarding the unfair credit relationship claim under Section 140A, the ombudsman found that even if the Supplier had breached Regulation 14(3), the credit relationship was not unfair because Mrs and Mr T's purchase was not motivated by the investment element—their subsequent complaints concerned booking fees and availability, not investment returns. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Mrs T's Section 75 misrepresentation claim was time-barred under the Limitation Act 1980, as the cause of action accrued on the date of sale (8 July 2012) and the claim was not made until October 2022, outside the six-year limitation period. Section 32 of the Limitation Act did not apply as the PR failed to explain what concealment or fraud would extend the time limit. Regarding Section 140A, even if the Supplier breached Regulation 14(3) by marketing the product as an investment, this did not render the credit relationship unfair because: (1) Mrs and Mr T's purchase was not motivated by the prospect of financial gain from the investment element, as evidenced by their later complaints about booking fees and availability rather than the investment; (2) no direct testimony from Mrs and Mr T was provided to support allegations of misrepresentation; (3) the lending was not shown to be unaffordable; and (4) regulatory breaches do not automatically create unfairness under Section 140A—their impact must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website