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

Decision detail

Summary

Ms K complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by being party to an unfair credit relationship and rejecting her Section 75 claim against the timeshare supplier. Ms K had purchased Fractional Club timeshare membership in August 2012 for £8,600 using a loan from the lender, but did not raise complaints until March 2019, more than six years later. The ombudsman found the Section 75 claim was time-barred under the Limitation Act and therefore reasonable to reject. Regarding the unfair credit relationship claim, the ombudsman considered whether the supplier breached Regulation 14(3) by marketing the timeshare as an investment and whether undisclosed commission rendered the relationship unfair. The ombudsman concluded that even if such breaches occurred, they were not material to Ms K's purchasing decision, which was primarily motivated by her desire to exit her perpetual previous membership and avoid burdening her beneficiaries, not by investment prospects. The ombudsman also found the commission payment (10.3% of the loan amount) was not so high as to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the Section 75 claim was time-barred as it was made more than six years after the Time of Sale, making it reasonable for the lender to reject it. Regarding the Section 140A unfair credit relationship claim, the ombudsman considered whether the supplier breached Regulation 14(3) by marketing the timeshare as an investment, but concluded that even if such a breach occurred, it was not material to Ms K's purchasing decision. The evidence showed that Ms K's primary motivation was to exit her perpetual previous membership and avoid burdening her beneficiaries, not to make a financial profit from the investment element. The ombudsman also found that the commission payment (10.3% of amount borrowed) was not so high as to render the relationship unfair, particularly given Ms K's lack of alternative means to finance the purchase and her clear desire for the product. The ombudsman applied the principles from the Supreme Court's Hopcraft, Johnson and Wrench judgment and found that the credit relationship was not unfair under Section 140A.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website