Not upheld: unfair credit relationship under Section 140A CCA; connected lender liability under Section 75 CCA; alleged breach of Timeshare Regulations 2010; undisclosed commission; alleged misrepresentation complaint against Mitsubishi HC Capital UK PLC trading as Novuna

Decision detail

Summary

Mr W purchased a Fractional Club timeshare membership for £11,299 in July 2012, financed by Novuna. Over 11 years later, in February 2024, he complained that the lender participated in an unfair credit relationship and should pay his Section 75 claim for alleged misrepresentations by the supplier. Mr W alleged the product was misrepresented as an investment and that he was pressured during a lengthy sales process. The ombudsman found that the alleged misrepresentations were not actionable, that any breach of the Timeshare Regulations was not material to Mr W's decision (which was driven by sales pressure rather than investment motivation), and that the undisclosed commission of 10.2% was insufficient to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering that regulatory breaches do not automatically render credit relationships unfair. Key findings: (1) alleged misrepresentations about holiday security and investment potential were not actionable as they were either opinions or truthful statements; (2) while the Supplier may have breached Regulation 14(3) by marketing the product as an investment, Mr W's own evidence showed he was motivated by pressure to leave the sales venue rather than investment prospects, so any breach was not material to his decision; (3) the commission of 10.2% was low compared to the 55% in the Johnson case and would not have deterred Mr W from borrowing; (4) the Supplier did not owe Mr W a fiduciary duty when acting as credit broker; (5) Mr W's recollections over 11 years later were unreliable and potentially influenced by subsequent legal developments; (6) the lending was affordable and no evidence showed Mr W would not have proceeded with disclosure of commission.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website