Not upheld: irresponsible lending, misrepresentation, unfair credit relationship, breach of timeshare regulations, undisclosed commission complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Miss J purchased Fractional Club timeshare membership for £14,362 in June 2016, financed through a credit agreement with Novuna Personal Finance. She complained in July 2019 that the supplier misrepresented the product as an investment, that the lender failed to conduct proper affordability checks, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found no actionable misrepresentation, as the prospect of financial return from a property share was not a false statement of fact. Although the ombudsman acknowledged it was possible the supplier breached Regulation 14(3) by marketing the product as an investment, this did not render the credit relationship unfair because Miss J's purchase was motivated by holiday rights, not investment prospects. The ombudsman also found the commission arrangement (£356.18 or 2.48% of the loan) was not excessive and would not have deterred the purchase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic assessment of the credit relationship under Section 140A, considering that regulatory breaches do not automatically create unfairness. The key findings were: (1) no actionable misrepresentation was proven as the prospect of financial gain from the property share was not a false statement of fact; (2) even if Regulation 14(3) was breached by marketing as an investment, Miss J's purchase was not motivated by investment prospects but by desire for holiday rights; (3) the commission was low (2.48%) and would not have deterred the purchase; (4) Miss J understood the loan terms and affordability was not demonstrated to be an issue; (5) the evidence regarding Miss J's motivations was unreliable due to timing issues and inconsistencies between the complaint letter and her later statement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website