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; undisclosed commission; alleged breach of Timeshare Regulations complaint against Mitsubishi HC Capital UK Plc trading as Novuna Personal Finance

Decision detail

Summary

Mrs J and Mr H purchased Signature Collection timeshare membership for £9,170 in August 2016, financed by a £11,761 loan from Mitsubishi HC Capital UK Plc (Novuna Personal Finance). In October 2021, Mrs J complained that the supplier had misrepresented the product as having a guaranteed end date and as an investment, that the lender failed to conduct proper affordability checks, that the supplier applied pressure during the sales process, and that the lender failed to disclose commission arrangements (£107.03, representing 0.91% of the loan amount). The lender rejected all complaints. The ombudsman found no actionable misrepresentation (the share in the allocated property was inherently an investment and no specific sale date guarantee was proven), no breach of contract (holiday availability was subject to demand and the complainants had used their points), and that even if the supplier breached the Timeshare Regulations by marketing as an investment, this would not render the credit relationship unfair because Mrs J's purchase was not motivated by investment prospects—her late recollection of this motivation (provided only in 2024) was found unreliable. The ombudsman also found the undisclosed commission was too low (0.91%) and the circumstances too different from the Supreme Court's Hopcraft, Johnson and Wrench case to warrant relief. The complaint was not upheld.

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 holiday availability was subject to demand and the complainants had used their points on multiple occasions. The ombudsman found that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this would not render the credit relationship unfair because Mrs J's purchase decision was not motivated by the prospect of financial gain—evidenced by her late recollection of this motivation (provided only in 2024, after the investigator's view and Supreme Court judgment), which the ombudsman found unreliable due to the passage of time and risk of influence. Regarding commission, the ombudsman distinguished the case from Hopcraft, Johnson and Wrench on the basis that the commission was very low (0.91% of amount borrowed), Mrs J had the price information needed to compare options, there was no evidence of improper commercial concealment, and the supplier was not acting as a separate fiduciary agent but as the timeshare seller. The ombudsman concluded that regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round with their actual impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website