Not upheld: undisclosed commission complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mr C borrowed £10,399 from Novuna in May 2012 to help purchase a timeshare membership, repaying the loan in September 2012. In December 2023, Mr C complained that Novuna and the timeshare Supplier failed to disclose commission payments between them, contrary to regulatory requirements and potentially constituting secret commission. The ombudsman found that while regulatory disclosure rules may have been breached, the Supplier did not owe Mr C a fiduciary duty (applying recent Supreme Court precedent), and the commission amount was immaterial to Mr C's decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's recent judgment in Hopcraft, Johnson and Wrench, which established that commission payments made by lenders to intermediaries are legal where the intermediary does not owe a fiduciary duty to the consumer. The ombudsman found that the Supplier, when acting as credit broker, did not owe Mr C a fiduciary duty, meaning remedies for secret commission were not available. While acknowledging potential regulatory breaches in disclosure requirements, the ombudsman concluded that the commission amount was not material enough to have influenced Mr C's decision to enter into the credit agreement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website