Partially upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare Regulations complaint against Mitsubishi HC Capital UK PLC, trading as Novuna Personal Finance
Financial Ombudsman decision DRN-6391255 of 2026-05-29T00:00:00+00:00. unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare Regulations complaint against Mitsubishi HC Capital UK PLC, trading as Novuna Personal Finance. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6391255 |
|---|---|
| Decision date | 2026-05-29T00:00:00+00:00 |
| Firm | Mitsubishi HC Capital UK PLC, trading as Novuna Personal Finance |
| Product | Personal loan |
| Claim type | unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare Regulations |
| Outcome | Partially upheld |
| Remedy | The Lender must: (1) Refund all repayments under Credit Agreement 2 and cancel any outstanding balance; (2) Refund annual management charges and the difference between trial membership trade-in value and capital sum refinanced; (3) Deduct the market value of holidays taken and promotional giveaways used; (4) Add simple interest at 8% per annum to net repayments from date paid until settlement; (5) Remove adverse credit file information within six years; (6) Indemnify Mr S against ongoing liabilities if Fractional Club membership remains in place, provided Mr and Mrs S assign or hold the Allocated Property interest for the Lender. |
Summary
Mr S purchased trial timeshare membership in July 2018 and subsequently upgraded to Fractional Club membership in December 2018, both financed by the Lender. The Fractional Club membership provided holiday rights and a share in property sale proceeds after 19 years. Mr S complained that the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, and that the Lender participated in an unfair credit relationship. The Ombudsman found that the Supplier's training materials and sales presentations emphasized financial returns and property ownership, implying that future profits were a reason to purchase. This breach was material to Mr S's decision, as evidenced by his witness statement. The Ombudsman upheld the complaint regarding Credit Agreement 2 and ordered the Lender to refund repayments, management charges, and provide compensation with interest, while deducting the value of holidays taken and promotional benefits used.
The Ombudsman's reasoning
The Ombudsman found that the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing and selling Fractional Club membership as an investment. The training materials and sales presentations emphasized financial returns, property ownership, and the prospect of receiving money back after 19 years, which collectively implied that future financial returns were a good reason to purchase the product. This breach was material to Mr S's decision to purchase, as evidenced by his witness statement indicating he was persuaded to upgrade as an investment with profit potential. The Lender participated in and perpetuated this unfair credit relationship by financing the purchase. Regulatory breaches do not automatically create unfairness under Section 140A, but must be considered in the round; however, in this case, the breach directly led Mr S to enter into the credit agreement, rendering the relationship unfair.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Mitsubishi HC Capital UK PLC, trading as Novuna Personal Finance, all decisions | 79 | 16% |
| Personal loan, all decisions | 22,762 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website