Upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010; connected lender liability under Section 75 of the Consumer Credit Act 1974 complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mrs B purchased Fractional Club membership (a regulated timeshare contract) for £14,430 on 12 August 2019, financed through a credit agreement with Novuna Personal Finance. The membership provided both holiday rights and a share in the net sale proceeds of an allocated property. Mrs B complained that the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing and selling the membership as an investment, and that this rendered the credit relationship unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman upheld the complaint, finding that the supplier's training materials and sales presentations presented membership as combining property ownership with financial returns ('money back' and 'return at the end of that period'), which constituted marketing the product as an investment contrary to the regulations. The ombudsman found Mrs B's testimony credible that she was motivated by the prospect of financial gain and that she would not have purchased but for the supplier's breach. The lender was ordered to provide comprehensive compensation including refund of all repayments, management charges, interest, credit file remediation, and indemnification against ongoing liabilities.

The Ombudsman's reasoning

The ombudsman found that the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing and selling Fractional Club membership as an investment. The training materials and sales presentations emphasized property ownership, wealth accumulation, and financial returns ('money back' and 'return at the end of that period'), which implied that future financial returns were a good reason to purchase the product. Although the contemporaneous paperwork contained disclaimers, the ombudsman took a holistic view of the sales process rather than relying solely on written disclaimers. The ombudsman found Mrs B's testimony credible and plausible, noting that the prospect of financial gain was a material and motivating factor in her decision to purchase. The breach of Regulation 14(3) rendered the credit relationship unfair under Section 140A of the Consumer Credit Act 1974, as Mrs B would not have entered into the purchase agreement and credit agreement but for the supplier's breach.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website