Partially upheld: unfair credit relationship (section 140A); section 75 claim; inadequate handling of financial hardship complaint against Mitsubishi HC Capital UK Plc trading as Novuna Personal Finance

Decision detail

Summary

Miss W purchased a Fractional Club timeshare membership in July 2016 for £10,694, borrowing £14,381 from the Lender. In October 2021, following a relationship breakdown and job change, she requested assistance with payments. The Lender's response was inadequate, addressing only the Time of Sale and providing only a telephone number without proactive follow-up. Miss W complained that the timeshare was misrepresented as an investment and that the credit relationship was unfair under section 140A of the Consumer Credit Act. The ombudsman rejected both the section 75 and section 140A claims, finding no actionable misrepresentation and that the 0.91% commission was not so high as to render the relationship unfair. However, the ombudsman upheld the complaint regarding the Lender's handling of financial hardship, finding it failed to provide adequate assistance and should have made proactive contact attempts, awarding £500 compensation for distress and inconvenience.

The Ombudsman's reasoning

The ombudsman found that while the Supplier may have marketed the timeshare as an investment in breach of Regulation 14(3), this did not render the credit relationship unfair because Miss W's primary motivation was the holiday rights, not financial gain. The commission of £130.87 (0.91% of the loan) was not so high as to suggest unfairness, particularly given Miss W had full disclosure of the credit terms and would have proceeded with the loan regardless. However, the Lender failed to adequately assist Miss W when she requested help with financial difficulties, providing only a telephone number without proactive follow-up despite her clear vulnerability following relationship breakdown and job change.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website