Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK Plc trading as Novuna Personal Finance

Decision detail

Summary

Mrs M purchased a fractional timeshare club membership in 2018 for £21,190, financed by a £21,321 loan from Novuna Personal Finance. The membership included a share in an allocated property's net sale proceeds. She complained in 2023 that the supplier had misrepresented the product as an investment in breach of timeshare regulations, that there was a breach of contract regarding holiday availability, and that the lender was party to an unfair credit relationship. The ombudsman found no actionable misrepresentation (as the property share was genuinely an investment asset), no breach of contract (as Mrs M successfully took multiple holidays), and no unfair credit relationship. Although the supplier may have breached the prohibition on marketing timeshares as investments, this did not render the credit relationship unfair because Mrs M's purchase was motivated by the desire for a tailored holiday experience rather than investment returns. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A of the Consumer Credit Act 1974, considering whether the credit relationship was unfair in all the circumstances. While acknowledging that a breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments) was possible, the ombudsman found this was not determinative. The key finding was that Mrs M's purchase was motivated by the desire for a 'tailored holiday experience' rather than by the prospect of financial gain from the allocated property share. Therefore, even if the supplier had breached Regulation 14(3), this would not have rendered the credit relationship unfair because it did not materially influence her purchasing decision. The ombudsman also found the commission arrangement (£852.84, representing only 3.71% of the charge for credit) was not so high as to create unfairness, particularly given Mrs M had the information needed to understand the cost of credit and compare alternatives. The ombudsman rejected arguments that the product was inherently exploitative, noting that Mrs M knew what she was paying and what she was receiving in return.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website