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

Decision detail

Summary

Mr and Mrs Y purchased a Fractional Club timeshare membership in February 2018 for £13,647, financed by a £17,121 loan from Hitachi Personal Finance. The membership included holiday rights and a share in net sale proceeds of an allocated property. In February 2024, more than six years later, they complained that the product was misrepresented as an investment in breach of the Timeshare Regulations, that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974, and that commission arrangements were undisclosed. The ombudsman found the Section 75 claim time-barred, rejected the allegation that describing the product as an investment was a misrepresentation, and concluded that even if the supplier had breached Regulation 14(3), this would not have rendered the credit relationship unfair because the complainants' own evidence demonstrated they were not motivated by investment prospects. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that: (1) the Section 75 claim was barred by the Limitation Act 1980 as it was made more than six years after the time of sale; (2) describing Fractional Club membership as an investment was not a misrepresentation as it genuinely included a share in property sale proceeds; (3) even if the supplier breached Regulation 14(3) by marketing the product as an investment, this was not material to the complainants' decision to purchase, as their own evidence showed they were not motivated by the prospect of financial gain; (4) the commission of 4% was low and would not have deterred the purchase had it been disclosed; (5) the supplier did not owe a fiduciary duty to the complainants; (6) regulatory breaches do not automatically render a credit relationship unfair under Section 140A; and (7) the complainants would have proceeded with the purchase regardless of any alleged breaches.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website