Not upheld: unfair credit relationship under Section 140A CCA; connected lender liability under Section 75 CCA; alleged breach of Timeshare Regulations Regulation 14(3); alleged misleading omissions under CPUT Regulations; undisclosed commission arrangements complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance, formerly Hitachi Capital (UK) PLC trading as Hitachi Personal Finance)

Decision detail

Summary

Mr M purchased Fractional Club timeshare membership in September 2018 using finance from Novuna, claiming the Supplier misrepresented the product as an investment and that the credit relationship was unfair under Section 140A CCA. The ombudsman found insufficient evidence of actionable misrepresentation, noting Mr M's written recollections were submitted 3 years late and appeared influenced by subsequent case law. While acknowledging possible regulatory breaches (marketing prohibition, information failures, undisclosed commission), the ombudsman found these did not render the relationship unfair because Mr M's purchase was not motivated by investment prospects, the commission was modest at 3.71% of credit charges, and regulatory breaches do not automatically establish unfairness. The complaint was rejected in full.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering the entirety of the relationship rather than isolated breaches. While acknowledging possible regulatory breaches (Regulation 14(3) marketing prohibition, information provision failures, commission disclosure), the ombudsman found these did not render the relationship unfair because: (1) Mr M provided insufficient evidence of specific misrepresentations; (2) his written recollections were submitted 3 years late and appeared influenced by subsequent case law (Shawbrook & BPF v FOS), creating credibility concerns; (3) the prospect of financial gain from the property was not a material motivating factor in his purchase decision; (4) the commission was modest (3.71% of charge for credit) compared to the 55% in Johnson v FirstRand; (5) the Supplier did not owe a fiduciary duty to Mr M; (6) Mr M had a 14-day cooling-off period he did not exercise; (7) regulatory breaches do not automatically create unfairness under Section 140A (per Plevin). The ombudsman applied causation principles from Carney and Kerrigan, finding that even if breaches occurred, they would not have altered Mr M's purchasing decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website