Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation claim under Section 75 of the Consumer Credit Act 1974; alleged breach of Timeshare Regulations 2010 Regulation 14(3); undisclosed commission payment complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mrs B purchased a Fractional Club timeshare membership for £11,124 in December 2012, financed by a consumer credit agreement from Novuna Personal Finance. She later complained that the supplier misrepresented the product as an investment in breach of Timeshare Regulations, that the credit relationship was unfair under Section 140A, and that an undisclosed commission payment rendered the relationship unfair. The ombudsman found no actionable misrepresentation under Section 75, and concluded that although the supplier may have breached the prohibition on marketing timeshares as investments, this was not material to Mrs B's decision because her own evidence showed she was motivated by holiday availability rather than profit. The 10% commission payment was not sufficiently high to create unfairness, and the lender did not owe fiduciary duties. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, finding that regulatory breaches do not automatically create unfairness; their consequences must be considered in the round. Although the supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, this was not material to Mrs B's decision because her own evidence showed she was motivated by holiday availability and recovering her initial investment, not by profit expectations. The commission payment of 10% was not high enough to render the relationship unfair, particularly given Mrs B wanted the product and had no alternative means to pay. The lender did not owe a fiduciary duty to Mrs B, and no actionable misrepresentation was established under Section 75.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website