Not upheld: unfair credit relationship under Section 140A CCA; connected lender liability under Section 75 CCA; alleged breach of Timeshare Regulations; alleged mis-selling and misrepresentation complaint against Mitsubishi HC Capital UK PLC (trading as Hitachi Capital Consumer Finance at the time of sale, now trading as Novuna Personal Finance)

Decision detail

Summary

Mr P purchased Fractional Club timeshare membership in February 2013 financed by Novuna, and complained in June 2018 alleging mis-selling and poor service. After initial rejection by Novuna and referral to FOS, a professional representative became involved and expanded the complaint in October 2021 to include claims of misrepresentation and breach of contract under Section 75 CCA, and an unfair credit relationship under Section 140A CCA, citing alleged breaches of the Timeshare Regulations and undisclosed commission. The ombudsman found insufficient evidence of actionable misrepresentation, no breach of contract (as the Deed of Trust permitted mortgaging of properties), and no unfair credit relationship, as any possible breach of Regulation 14(3) was not material to Mr P's purchasing decision and the commission level was not sufficiently high to render the relationship unfair. The complaint was rejected in its entirety.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation because Mr P provided insufficient detail about what was said at the point of sale and no corroborating evidence existed. Regarding breach of contract, the Deed of Trust explicitly permitted the Trustee to mortgage properties, so the presence of debentures did not constitute a breach. On the unfair credit relationship claim, the ombudsman considered multiple factors including affordability, pressure, information provision, and commission arrangements. While acknowledging a possible breach of Regulation 14(3) regarding marketing as an investment, the ombudsman found this was not material to Mr P's purchasing decision, as evidenced by his failure to mention investment potential in his original complaint. The commission of £980 (5.48% of charge for credit) was not sufficiently high to render the relationship unfair, particularly in contrast to the 55% commission in the Johnson case. The ombudsman rejected the argument that regulatory breaches automatically create unfairness under Section 140A, citing Plevin and subsequent case law requiring consideration of the relationship in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website