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 Regulation 14(3) of the Timeshare Regulations; undisclosed commission arrangements complaint against Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance

Decision detail

Summary

Mr F purchased Fractional Club timeshare membership in November 2017 for £15,619.00, financed by a £19,521.00 loan from the Lender. In January 2023, approximately 5 years later, Mr F complained that the Supplier had misrepresented the product as an investment and that the Lender was party to an unfair credit relationship. Mr F also claimed the Lender failed to disclose commission arrangements with the Supplier. The ombudsman found no actionable misrepresentation under Section 75 of the CCA, as the Supplier's statements were opinions rather than false facts. Although the ombudsman acknowledged the Supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, this was not material to Mr F's decision to purchase, which was primarily motivated by holiday access. The ombudsman also rejected the unfair credit relationship claim under Section 140A, finding the undisclosed commission of 0.91% was not sufficiently high or concealed to render the relationship unfair, and distinguished the case from the Supreme Court's Hopcraft, Johnson and Wrench decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier under Section 75 of the CCA. While acknowledging that the Supplier may have marketed the Fractional Club as an investment in breach of Regulation 14(3) of the Timeshare Regulations, the ombudsman concluded this was not material to Mr F's decision to purchase, which was primarily motivated by holiday access rather than investment returns. The ombudsman placed limited weight on Mr F's late testimony about investment motivation due to timing concerns (created 7 years after purchase and after the Shawbrook & BPF v FOS judgment). Regarding commission, the ombudsman distinguished this case from Hopcraft, Johnson and Wrench on the basis that the commission rate was very low (0.91%), there was no evidence of concealment of commercial ties, and Mr F would have proceeded with the purchase regardless of disclosure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website