Not upheld: unfair credit relationship (section 140A CCA 1974), connected lender liability (section 75 CCA 1974), alleged breach of Timeshare Regulations (Regulation 14(3)), alleged failure to disclose commission arrangements complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Miss F purchased a Fractional Club timeshare membership for £19,831 in October 2018, financed by a £20,210 credit agreement from Mitsubishi HC Capital UK Plc. The membership included holiday rights and a share in property sale proceeds. Miss F complained in November 2023 that the product was misrepresented as an investment in breach of Timeshare Regulations, that the lender failed to disclose commission arrangements (£808.44), and that the credit relationship was unfair. The ombudsman found no actionable misrepresentation or breach of contract by the supplier, and while accepting a possible breach of the investment marketing prohibition, found Miss F's purchase was not materially motivated by investment prospects based on her original complaint not persuasively raising this motivation. The ombudsman found the commission was not disproportionate and did not evidence concealed commercial ties or conflicts of interest, and found no evidence of unaffordable lending or improper pressure. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. On section 75 claims, the ombudsman found no actionable misrepresentation by the supplier regarding guaranteed end dates, real property interests, or investment characterization. Regarding breach of contract, the ombudsman found no evidence that the supplier breached the Purchase Agreement regarding holiday availability, noting Miss F successfully made ten bookings and that availability was subject to demand as stated in the paperwork. On section 140A unfair credit relationship claims, the ombudsman considered: (1) whether Regulation 14(3) of the Timeshare Regulations was breached by marketing as an investment - while accepting this was possible, the ombudsman found Miss F's purchase decision was not materially motivated by prospect of financial gain, as evidenced by her original letter of complaint not persuasively raising this as a motivation, and later statements being inconsistent and temporally proximate to judicial review decisions; (2) whether commission non-disclosure rendered the relationship unfair - applying the Supreme Court's Hopcraft, Johnson and Wrench framework, the ombudsman found the commission (£808.44, 4% of borrowing) was not disproportionate and there was no evidence of concealed commercial ties, undisclosed advisory roles, or conflicts of interest; (3) whether lending was unaffordable - the ombudsman found Miss F's bank statements showed significant income and positive balances, and she provided no credit file despite opportunity, so affordability was not established; (4) whether Miss F was pressured - the ombudsman found insufficient evidence, noting the inconsistency between her original complaint (which did not expressly raise pressure) and later statements, and that she did not exercise her 14-day cooling-off right. The ombudsman emphasized that regulatory breaches do not automatically create unfairness under section 140A and must be considered in the round with their material impact on the consumer's decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website