Not upheld: Other regulated complaint complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mr C purchased Fractional Club timeshare membership for £13,529 in April 2016, financed through a credit agreement with Novuna Personal Finance. In August 2023, Mr C complained that the supplier had misrepresented the product as an investment in breach of the Timeshare Regulations and that the Lender was party to an unfair credit relationship. The ombudsman found that while the Fractional Club included an investment element (a share in an allocated property), this did not constitute an actionable misrepresentation, as the investment element was not untrue and there was no compelling evidence that Mr C's purchase decision was motivated by the prospect of financial gain. Although the ombudsman acknowledged the possibility that the supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, regulatory breaches do not automatically render a credit relationship unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman examined multiple factors including sales practices, information provision, and commission arrangements, but found none rendered the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the Fractional Club membership included an investment element (share in allocated property), this did not constitute an actionable misrepresentation under Section 75 of the CCA. The ombudsman noted that the Timeshare Regulations prohibited marketing timeshares 'as an investment' but not the mere existence of investment elements. Although there was competing evidence about whether the supplier marketed the product as an investment in breach of Regulation 14(3), the ombudsman found no compelling evidence that Mr C's decision to purchase was motivated by the prospect of financial gain. Under Section 140A, the ombudsman considered multiple factors including sales practices, information provision, and commission arrangements, but found none rendered the credit relationship unfair. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench regarding commission disclosure but distinguished the case on the basis that no commission was paid by the Lender to the Supplier and there was no evidence of a fiduciary duty owed by the Supplier to Mr C.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website