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

Mr P complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims relating to his £7,800 purchase of Fractional Club timeshare membership in April 2013. Mr P alleged the supplier misrepresented the product as an investment, guaranteed an end date, and pressured him into the purchase. He also complained about undisclosed commission of £760.50 paid by the lender to the supplier. The ombudsman found no actionable misrepresentation, as the prospect of financial gain was not an important motivating factor in Mr P's decision. Although the supplier may have breached the Timeshare Regulations prohibition on marketing timeshares as investments, this was not material to the fairness of the credit relationship. The commission, at 9.75% of the loan amount, was not sufficiently high or concealed to render the relationship unfair under Section 140A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding investment potential, guaranteed end date, exclusivity, or holiday availability. While acknowledging the supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman concluded this was not material to Mr P's decision, as the prospect of financial gain was not an important motivating factor in his purchase. The commission arrangement, at 9.75% of the loan amount, was not sufficiently high or concealed to render the credit relationship unfair under Section 140A, particularly given Mr P received information about the price and cost of credit. The supplier did not owe Mr P a fiduciary duty when acting as credit broker, so remedies for secret commission were unavailable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website