Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Timeshare Regulations; undisclosed commission complaint against Mitsubishi HC Capital UK PLC

Decision detail

Summary

Mr A purchased a Fractional Club timeshare membership for £16,829 in February 2018, financed by Mitsubishi HC Capital UK PLC, and complained in January 2024 that the lender was party to an unfair credit relationship and failed to pay claims under Section 75 of the Consumer Credit Act 1974 for alleged misrepresentation and breach of contract by the supplier. The ombudsman found no evidence of actionable misrepresentation or breach of contract, and determined that even if the supplier had breached the Timeshare Regulations by marketing the product as an investment, this would not have been material to Mr A's decision to purchase, as his own evidence showed he was motivated by benefits and long-term value rather than profit expectations. The undisclosed commission of 4% was found to be too low to render the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, finding that regulatory breaches do not automatically create unfairness. The key finding was that Mr A's purchase was not motivated by the prospect of financial gain from the allocated property, as evidenced by his own statement which mentioned benefits and long-term investment without demonstrating expectation of profit. Even if the supplier breached Regulation 14(3) by marketing the product as an investment, this would not have been material to Mr A's decision. The commission of 4% was not high enough to render the relationship unfair, particularly given Mr A wanted the product and had no alternative means to pay. The ombudsman found no fiduciary duty owed by the supplier as credit broker, and no evidence of misrepresentation or breach of contract by the supplier.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website