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 complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mr W purchased a Fractional Club timeshare membership in February 2012 for £14,099, financed through a credit agreement with Novuna Personal Finance. The timeshare included both holiday rights and a share in the net proceeds of an allocated property. In January 2020, Mr W complained that the Lender acted unfairly by rejecting his Section 75 claim for misrepresentation and that the credit relationship was unfair under Section 140A, alleging the product was marketed as an investment in breach of the Timeshare Regulations and that commission was undisclosed. The ombudsman found the Section 75 claim was time-barred and that the credit relationship was not unfair because Mr W's purchase was motivated by holiday benefits rather than financial gain from the property investment, meaning any regulatory breach would not have affected his decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering that regulatory breaches do not automatically create unfairness. The key finding was that Mr W's purchase motivation was primarily driven by holiday benefits and cost savings, not financial gain from the property investment element. Even if the Supplier breached Regulation 14(3) by marketing the product as an investment, this would not have materially affected Mr W's decision. The commission payment, while potentially undisclosed, was modest (5.61% of credit charge) compared to the 55% in the Supreme Court's Johnson case, and Mr W would have proceeded with the loan regardless. The Section 75 claim was properly rejected as time-barred under the Limitation Act 1980, with no persuasive evidence of fraud or concealment to extend the limitation period.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website