Not upheld: unfair credit relationships 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, Holiday Products, Resale and Exchange Contracts Regulations 2010; undisclosed commission arrangements complaint against Mitsubishi HC Capital UK Plc trading as Novuna Personal Finance

Decision detail

Summary

Mr W complained that Mitsubishi HC Capital UK Plc (trading as Novuna Personal Finance) acted unfairly by being party to unfair credit relationships and refusing Section 75 claims relating to timeshare fractional club memberships purchased in August 2017 and August 2019. The investigator found the supplier had breached Regulation 14(3) of the Timeshare Regulations by marketing memberships as investments, rendering the credit relationships unfair. However, the ombudsman found that while a breach was possible, Mr W's testimony showed investment returns were not material to his purchasing decisions, which were primarily motivated by holiday benefits and membership tier improvements. Applying the Supreme Court's principles from Hopcraft, Johnson and Wrench, the ombudsman concluded that the commission arrangements (approximately 2.5% in 2017) were not disproportionately high and that Mr W would have proceeded with the purchases regardless of any regulatory breaches or commission disclosure failures. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have breached Regulation 14(3) by marketing memberships as investments, this was not material to Mr W's purchasing decisions. Mr W's testimony focused on holiday benefits and access improvements rather than investment returns. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, finding that the commission (approximately 2.5%) was not disproportionately high and that Mr W had sufficient information about the cost of credit. The ombudsman concluded that even if regulatory breaches occurred, they did not render the credit relationships unfair under Section 140A because Mr W would have proceeded with the purchases regardless. The ombudsman also found no credible evidence of pressure that significantly impaired Mr W's choice, noting he did not exercise his 14-day cooling-off rights.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website