Not upheld: connected lender liability (Section 75 CCA); unfair credit relationship (Section 140A CCA) complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Miss Z complained that Novuna Personal Finance acted unfairly by being party to an unfair credit relationship and by rejecting a Section 75 claim for misrepresentation regarding a Fractional Club timeshare purchased in December 2018 for £11,769, financed by a £22,680 loan. She alleged the supplier misrepresented the product as providing secure holidays and investment returns, breached the Timeshare Regulations by marketing it as an investment, pressured her into the purchase, and that the lender failed to conduct proper affordability checks and failed to disclose commission arrangements. The ombudsman rejected all grounds, finding that Miss Z's own testimony did not support the alleged misrepresentations, that she was not motivated by investment potential (so any regulatory breach would not have affected her decision), that the low commission level and full pricing disclosure meant the relationship was not unfair, and that the lender's affordability checks were proportionate and reasonable.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether any alleged breaches (misrepresentation, pressure, affordability, regulatory non-compliance, or commission arrangements) rendered the credit relationship unfair. The key finding was that Miss Z's own testimony did not support that she was motivated by investment potential or that she felt pressured. The ombudsman found that even if regulatory breaches occurred, they would not have changed Miss Z's purchasing decision because the investment element was not a material motivating factor. The commission level (3.71% of charge for credit) was low compared to the Supreme Court's recent guidance in Hopcraft/Johnson/Wrench, and Miss Z had full information about the cost of credit and could compare alternatives. The ombudsman rejected the professional representative's template-style complaint letter as carrying little weight.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website