Not upheld: Connected lender liability (Section 75 CCA) and unfair credit relationship (Section 140A CCA); alleged misrepresentation and breach of contract by supplier; alleged breach of Timeshare Regulations; undisclosed commission complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mr W complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by financing a timeshare purchase that involved misrepresentation and breach of contract by the supplier, and by being party to an unfair credit relationship. The purchase was made in October 2017 for £10,999 (total repayable £22,867), but the complaint was not raised until March 2024. The ombudsman found the Section 75 connected lender liability claim was time-barred under the Limitation Act 1980 as more than six years had passed since the cause of action accrued. Regarding the Section 140A unfair credit relationship claim, the ombudsman concluded the relationship was not unfair because: Mr W's primary motivation was upgrading holiday entitlements rather than investment returns; the commission paid to the supplier (3.71% of credit charge) was not high; the supplier did not owe a fiduciary duty; and Mr W would have proceeded with the purchase regardless of any regulatory breaches regarding information disclosure or marketing practices. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found the Section 75 misrepresentation claim was time-barred under the Limitation Act 1980, as the cause of action accrued on 10 October 2017 and the claim was not raised until 8 March 2024 (over six years later). Section 32 of the Limitation Act did not apply as the alleged problems would have been apparent shortly after purchase. Regarding Section 140A unfairness, the ombudsman concluded: (1) the lending was affordable; (2) pressure allegations were implausible given Mr W returned to purchase an upgraded product months later and did not exercise the cooling-off period; (3) even if the supplier breached Regulation 14(3) by marketing as an investment, this was not material to Mr W's purchasing decision, which was motivated by upgrading holiday entitlements; (4) the commission of 3.71% of the charge for credit was not high and did not create unfairness, distinguishing the case from Johnson where commission was 55%; (5) the supplier did not owe Mr W a fiduciary duty when acting as credit broker; (6) any regulatory breaches regarding information provision did not render the relationship unfair given Mr W would have proceeded with the purchase regardless.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website