Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK PLC trading as Novuna Consumer Finance

Decision detail

Summary

Mr O complained that Mitsubishi HC Capital UK PLC (trading as Novuna Consumer Finance) acted unfairly by being party to an unfair credit relationship and by declining claims under Section 75 of the Consumer Credit Act 1974 relating to timeshare purchases. Mr O and his wife purchased a trial timeshare membership in May 2018 and upgraded to Fractional Club membership in July 2018, financing both purchases through loans from the lender. The complaint alleged misrepresentation by the supplier regarding the investment potential and terms of the membership, and that the credit relationships were unfair under Section 140A. The ombudsman found that the supplier's statements about purchasing a property share and receiving sale proceeds were not false statements of fact, and that Mr O's testimony indicated his purchase was motivated by holiday access rather than financial gain. Even assuming a breach of timeshare marketing regulations, the ombudsman concluded this did not render the credit relationship unfair because it was not causative of Mr O's purchasing decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier because: (1) telling prospective members they were buying a share of a property and would receive proceeds from its sale was not untrue; (2) Mr O provided insufficient evidence of false statements of existing fact; (3) opinions about future property value are not misrepresentations unless the holder did not hold or could not reasonably hold them. Regarding Section 140A unfairness, the ombudsman concluded that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this did not render the credit relationship unfair because Mr O's testimony showed his purchase was motivated by holiday access and resort locations, not financial gain. The ombudsman applied the principle from case law that regulatory breaches do not automatically create unfairness and must be considered in the round with regard to their impact on the complainant. The commission paid (0.91% of amount borrowed) was not high enough to create unfairness compared to the Supreme Court's guidance on commission cases.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website