Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; Section 75 claim handling; alleged breach of Timeshare Regulations Regulation 14(3); undisclosed commission complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Mrs A purchased a Fractional Club timeshare membership in May 2017 for £13,910 using a loan from Mitsubishi HC Capital UK Plc. In December 2023, over 6 years later, she complained that the Lender was party to an unfair credit relationship and rejected her Section 75 claim. Mrs A alleged the membership was marketed as an investment in breach of the Timeshare Regulations, that she felt coerced, and that commission arrangements were undisclosed. The ombudsman found the Section 75 claim was made outside statutory time limits and rejected the unfair relationship claim because: Mrs A's statement that the investment element motivated her purchase was given 8 years after the sale and contradicted her original complaint; the commission of £556.40 (4% of the loan) was low and would not have changed her decision; and regulatory breaches do not automatically render credit relationships unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the CCA to assess whether the credit relationship was unfair. Key reasoning: (1) While the Supplier may have breached Regulation 14(3) by marketing the membership as an investment, regulatory breaches do not automatically create unfairness under Section 140A; such breaches must be considered in the round. (2) Mrs A's testimony that the investment element motivated her purchase was given almost 8 years after the Time of Sale, after relevant case law was decided, and contradicted her original 2023 complaint which made no mention of investment motivation. The ombudsman found insufficient weight could be given to this late recollection. (3) The commission of £556.40 (4% of amount borrowed) was low compared to the Supreme Court's guidance in Hopcraft, Johnson and Wrench (which involved 55% commission), and Mrs A would likely have proceeded with the purchase regardless of disclosure. (4) The Supplier did not owe Mrs A a fiduciary duty when acting as credit broker, so remedies for secret commission were unavailable. (5) Mrs A was given a 14-day cooling-off period and provided no credible explanation for not cancelling. (6) The lending was not shown to be unaffordable for Mrs A.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website