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 Timeshare Regulations 2010 Regulation 14(3); undisclosed commission arrangements complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Mr A purchased Fractional Club timeshare membership in May 2019 for £13,960, financed by a £17,815 loan from Mitsubishi HC Capital UK Plc. The membership provided holiday rights and a share in net sale proceeds of an Allocated Property. Mr A complained through a professional representative in February 2020, alleging misrepresentation, breach of contract, an unfair credit relationship under Section 140A, and improper marketing as an investment in breach of Timeshare Regulations. The lender rejected all claims. An investigator upheld the complaint, but the ombudsman disagreed. The ombudsman found no actionable misrepresentation (the product had genuine substance), no breach of contract (the Fractional Club remained functional), and no unfair credit relationship, as the investment element was not material to Mr A's decision and the commission was modest at 4%. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A unfairness, considering regulatory breaches do not automatically create unfairness. Key findings: (1) No actionable misrepresentation of Fractional Club membership as it had genuine substance (holiday rights and property share); (2) No breach of contract as the Fractional Club remained functional; (3) Possible breach of Regulation 14(3) (marketing as investment) but not material to Mr A's decision, as evidence showed the investment element was not his primary motivation - he was purchasing full membership for holiday rights he did not previously own; (4) The commission of 4% was not high enough to render the relationship unfair, especially given Mr A wanted the product and had no independent means to pay; (5) The supplier did not owe a fiduciary duty to Mr A; (6) Mr A's late statement (provided years after complaint) was not sufficiently persuasive, particularly given it contradicted his earlier complaint letter and the supplier's records showing he intended to purchase more points; (7) Affordability was not demonstrated to be an issue; (8) Pressure allegations lacked credible evidence given the 14-day cooling-off period was not used.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website