Upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 complaint against Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance
Financial Ombudsman decision DRN-6402005 of 2026-06-03T00:00:00+00:00. unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 complaint against Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance. Outcome: Upheld.
Decision detail
| Reference | DRN-6402005 |
|---|---|
| Decision date | 2026-06-03T00:00:00+00:00 |
| Firm | Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance |
| Product | timeshare finance (credit agreement) |
| Claim type | unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 |
| Outcome | Upheld |
| Remedy | The lender must: (1) Refund all of Mrs S's repayments under the Credit Agreement, including settlement sums, and cancel any outstanding balance; (2) Refund the difference between Fractional Club annual management charges and what Vacation Club charges would have been (between Time of Sale and Time of Upgrade), plus 19% of the difference in management charges after the Time of Upgrade; (3) Deduct the value of promotional giveaways used, and the market value of holidays taken using excess Fractional Points (proportionately calculated); (4) Add simple interest at 8% per annum to each net repayment from the date made until settlement; (5) Remove any adverse credit file information relating to the Credit Agreement within six years; (6) Request the supplier reduce Mrs S's Fractional Points by 2,241, with Mrs S holding remaining points for the lender's benefit, and indemnify Mrs S against 19% of ongoing liabilities. |
Summary
Mrs S purchased Fractional Club timeshare membership in January 2013 for £10,966 financed by the lender, after being told by the supplier's sales representatives that it was an investment offering financial returns. The supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment. The lender, as the credit provider, participated in and perpetuated this unfair credit relationship by financing a purchase induced by the supplier's regulatory breach. The ombudsman upheld Mrs S's complaint and directed the lender to refund all repayments, cancel any outstanding balance, refund excess management charges, add 8% simple interest, remove adverse credit information, and take steps to reduce her Fractional Points holdings while indemnifying her against ongoing liabilities.
The Ombudsman's reasoning
The ombudsman found that the supplier breached Regulation 14(3) by marketing and selling the Fractional Club membership as an investment, contrary to the prohibition on marketing timeshares as investments. The training materials and sales slides indicated that sales representatives would have described the membership as an investment offering financial returns. Mrs S's testimony that she was told she would receive her money back with a profit was consistent with this training and the inherent probabilities of the sale. The breach was material to Mrs S's purchasing decision, as the prospect of financial gain was a motivating factor alongside holiday benefits. Consequently, the credit relationship between Mrs S and the lender was rendered unfair under Section 140A of the Consumer Credit Act 1974, as the lender participated in and perpetuated this unfairness by financing a purchase induced by the supplier's regulatory breach.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance, all decisions | 9 | 11% |
Source
Read the original decision on the Financial Ombudsman Service website