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 misrepresentation and breach of contract by supplier; alleged breach of Timeshare Regulations; undisclosed commission arrangements complaint against Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance

Decision detail

Summary

Mr H financed a £13,949 Fractional Club timeshare purchase through a credit agreement with Novuna Consumer Finance. He later complained that the supplier misrepresented the product as an investment with a guaranteed end date, that the supplier breached the purchase agreement, and that the lender was party to an unfair credit relationship. The ombudsman found no actionable misrepresentation, as the investment element was inherent to the product and no specific sale guarantee was proven. The ombudsman also found no material breach of contract, as Mr and Mrs H continued to use their membership and provided no evidence of lost rights. Although the ombudsman acknowledged the supplier may have breached Timeshare Regulations by marketing the product as an investment, this was not material to the consumers' purchasing decision, which was not motivated by profit. The ombudsman rejected the complaint in full, finding no unfair credit relationship.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding guaranteed end dates or investment characterization, as the share in the allocated property was inherently an investment and no specific guarantee of sale date was proven. Regarding breach of contract, the ombudsman found insufficient evidence that the supplier breached the Purchase Agreement, noting that Mr and Mrs H continued to use their membership and provided no evidence of loss of rights. On the Section 140A unfair relationship claim, the ombudsman concluded that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this was not material to Mr and Mrs H's purchasing decision, which was not motivated by profit prospects. The ombudsman also found that the commission arrangements did not render the relationship unfair, distinguishing the case from the Supreme Court's Hopcraft/Johnson/Wrench precedent on the basis that no commission was actually paid at the time of sale and there was no evidence of a fiduciary duty owed by the supplier to the consumer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website