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

Decision detail

Summary

Mr S and Mrs S purchased Fractional Club timeshare membership in October 2015 for £14,533, financed by a loan from Novuna Personal Finance. In January 2023, Mr S raised complaints alleging the supplier had misrepresented the product and breached the Timeshare Regulations by marketing it as an investment, and that the lender was party to an unfair credit relationship. The ombudsman found the Section 75 claim time-barred as it was raised over seven years after the sale. On the unfair credit relationship claim, the ombudsman found insufficient evidence that any regulatory breach regarding investment marketing was material to the purchase decision, as Mr S and Mrs S did not mention financial gain as a motivating factor. The ombudsman also found no commission was paid at the time of sale and that the supplier did not owe a fiduciary duty. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Limitation Act 1980 to find the Section 75 claim time-barred, as more than six years had passed since the time of sale (19 October 2015) to when the claim was first notified (31 January 2023). For the Section 140A unfair credit relationship claim, the ombudsman examined whether the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, but found insufficient evidence that this breach (if it occurred) was material to Mr S's purchasing decision. The ombudsman noted that Mr S and Mrs S did not mention financial gain as a motivating factor in their submission, suggesting the purchase was not motivated by investment prospects. Regarding the commission issue, the ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, finding that no commission was actually paid at the time of sale and that the supplier did not owe a fiduciary duty to Mr S. The ombudsman concluded that regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website