Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations 2010; undisclosed commission complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Consumer Finance)

Decision detail

Summary

Mr H complained that Mitsubishi HC Capital UK PLC (Novuna Consumer Finance) acted unfairly by being party to an unfair credit relationship and by rejecting a Section 75 claim regarding his purchase of Fractional Club timeshare membership financed by a £23,413 credit agreement. The Fractional Club was asset-backed and included a share in property sale proceeds. The ombudsman found no actionable misrepresentation, as Mr H's purchase was motivated by holiday benefits and the prospect of recovering some capital, not by profit expectations. Although the supplier may have breached Regulation 14(3) by marketing the product as an investment, this was not material to Mr H's decision-making. The undisclosed commission of £936.52 (4% of borrowing) was not high enough to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically create unfairness (they do not). While acknowledging the possibility that the supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman found this was not material because Mr H's purchase was not motivated by the prospect of financial gain or profit. The evidence showed Mr H was attracted to receiving back 'a percentage of the property value' alongside the holiday benefits, not to making a profit. The commission of 4% was not high enough to render the relationship unfair, particularly given Mr H wanted the product and had no alternative means to pay. The ombudsman found no actionable misrepresentation, no evidence of pressure, and no unfair contract terms operated unfairly in practice.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website