Partially upheld: unfair credit relationship (Section 140A CCA), section 75 claim handling, potential breach of Timeshare Regulations, undisclosed commission complaint against Mitsubishi HC Capital UK Plc trading as Novuna

Decision detail

Summary

Mr D purchased Fractional Club timeshare memberships in 2012 and 2014, financed through credit agreements with Novuna. He complained that the Lender acted unfairly by participating in an unfair credit relationship and rejecting his Section 75 claim. The Lender agreed to redress the 2012 purchase, but the Ombudsman had to determine the 2014 purchase complaint. The Ombudsman found no actionable misrepresentation under Section 75 and concluded that although Regulation 14(3) of the Timeshare Regulations may have been breached (prohibiting marketing timeshare as investment), this did not render the credit relationship unfair under Section 140A because Mr D's primary motivation was obtaining additional holiday points and removing booking fees, not financial gain. The undisclosed commission of 5.61% of the charge for credit was not sufficiently high to create unfairness. The complaint was partially upheld for the 2012 purchase only.

The Ombudsman's reasoning

The Ombudsman found the 2012 purchase should be redressed as agreed by the Lender. Regarding the 2014 purchase, the Ombudsman concluded: (1) no actionable misrepresentation occurred under Section 75 as presenting membership as an investment was not untrue given the property share element; (2) no specific breach of contract was established; (3) while Regulation 14(3) may have been breached, this did not render the credit relationship unfair under Section 140A because Mr D's primary motivation was obtaining additional holiday points and removing booking fees, not financial gain; (4) the commission of 5.61% of charge for credit was not so high as to create unfairness, particularly given Mr D received pricing information and could compare options; (5) the Supplier's role as credit broker was integral to the timeshare sale, not a separate service creating fiduciary duties; (6) Spanish law arguments were not persuasive given the Purchase Agreement was governed by English law and Mr D had benefited from the agreements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website