Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation claims under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; irresponsible lending complaint against Mitsubishi HC Capital UK Plc trading as Hitachi Personal Finance

Decision detail

Summary

Mr S purchased a Fractional Club timeshare membership for £14,850 financed by a loan from Mitsubishi HC Capital UK Plc in August 2015. The estate of Mr S (who died in February 2018) complained that the lender acted unfairly by participating in an unfair credit relationship and rejecting Section 75 claims for misrepresentation and breach of contract. The complaint alleged the supplier misrepresented the exit terms, sold the product as an investment in breach of regulations, and that undisclosed commercial arrangements between the lender and supplier rendered the credit relationship unfair. The ombudsman found no actionable misrepresentation, no breach of contract claim could succeed for a future event, and critically, Mr S's own statement showed his primary motivation was obtaining additional holiday points rather than financial gain. Even if regulatory breaches occurred, causation was not established as Mr S would have proceeded regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding the ability to exit membership or the finite nature of the membership term, as the Information Statement clearly explained the property would be sold in December 2029 and Mr S had extensive prior experience with timeshare schemes. Regarding the alleged breach of Regulation 14(3) (selling timeshare as investment), while the ombudsman acknowledged it was possible the supplier breached this regulation, such a breach does not automatically create unfairness under Section 140A. Crucially, Mr S's own statement indicated his primary motivation was obtaining additional holiday points, particularly for cruises, not financial gain. The ombudsman applied the causation test from Carney and Kerrigan, concluding that even if a breach occurred, Mr S would have entered into the agreement regardless. The lender paid no commission to the supplier, and Mr S had knowledge of alternative lenders from his extensive prior dealings. The ombudsman rejected arguments about pressure, restricted lender panels, and undisclosed commercial arrangements, finding these did not render the credit relationship unfair given the totality of circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website