Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; alleged misrepresentation and breach of contract by supplier; undisclosed commission arrangements complaint against Mitsubishi HC Capital UK PLC

Decision detail

Summary

Mr C purchased Fractional Club timeshare membership for £9,928 in August 2019, financing £4,928 through a loan from Mitsubishi HC Capital UK PLC, which was repaid in full by September 2020. Mr C complained that the Supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that he was promised investment returns, that he could not access holiday accommodation as promised, and that the Lender failed to disclose commission arrangements. The ombudsman found no actionable misrepresentation or breach of contract by the Supplier, and concluded that even if the Supplier had breached Regulation 14(3), Mr C's own evidence showed his purchase was motivated by capital recovery rather than profit expectation, making any breach immaterial to his decision. The ombudsman also found that the absence of any commission payment and the interest-free nature of the loan meant the credit relationship was not rendered unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering regulatory breaches do not automatically create unfairness but must be assessed in the round. On Section 75 claims, the ombudsman found no actionable misrepresentation regarding investment value or holiday access, and no breach of contract regarding availability restrictions. On the Regulation 14(3) breach allegation, while accepting it was possible the Supplier marketed the product as an investment, the ombudsman found Mr C's own testimony showed his purchase motivation was capital recovery rather than profit expectation, making any breach immaterial to his decision. On commission disclosure, the ombudsman distinguished the case from Hopcraft/Johnson/Wrench on the basis that no commission was actually paid and the loan was interest-free, so no sufficiently extreme inequality of knowledge arose. The ombudsman also found the alleged contractual tie between Lender and Supplier was not enforced in practice.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website