Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974 and rejection of section 75 claim complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Dr S purchased Fractional Club timeshare membership for £13,474 in July 2018, financed by a £17,481 credit agreement from Novuna Personal Finance. Dr S complained in August 2023 that the supplier misrepresented the product as an investment and that the credit relationship was unfair. The ombudsman found no actionable misrepresentation under section 75 of the Consumer Credit Act 1974 as the investment and holiday availability representations were not false. Under section 140A, the ombudsman concluded the credit relationship was not unfair because Dr S's purchase was motivated by holiday and property ownership interests rather than investment profit expectations, and any regulatory breaches by the supplier were not material to the fairness of the relationship. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation under section 75 because: (1) stating Fractional Club membership was an investment that could be sold at profit was not untrue given the property share element; (2) the holiday accommodation representation was not false as availability was on a first-come-first-served basis as disclosed. Under section 140A, the ombudsman concluded the credit relationship was not unfair because: (1) Dr S was not pressured into the purchase as evidenced by the 14-day cooling-off period they did not use; (2) even if the supplier breached Regulation 14(3) by marketing as an investment, Dr S's purchase was not motivated by profit expectations but by the holiday and property ownership aspects; (3) Dr S's recollections were inaccurate and did not demonstrate investment returns were fundamental to the decision; (4) any failures in disclosure of ongoing costs were not material to the outcome; (5) no unfair contract terms were operated unfairly in practice; (6) no commission was paid to the supplier and no improper commercial arrangements existed. The ombudsman rejected the PR's post-provisional arguments as lacking merit or evidence.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website