Not upheld: unfair credit relationship under section 140A CCA; section 75 CCA claims (misrepresentation and breach of contract); alleged breach of Timeshare Regulations Regulation 14(3); undisclosed commission arrangements complaint against Mitsubishi HC Capital UK Plc trading as Novuna Personal Finance

Decision detail

Summary

Miss T purchased two Fractional Club timeshare memberships in 2012, financed by loans from the lender. The memberships were asset-backed, providing both holiday rights and a share in net sale proceeds of an allocated property. Miss T raised complaints in January 2019 alleging misrepresentation, breach of contract, unfair credit relationships under section 140A, and undisclosed commission arrangements. The ombudsman found that section 75 claims were time-barred as raised more than six years after purchase. On section 140A, the ombudsman concluded the credit relationships were not unfair because Miss T's motivation was holiday access rather than investment returns (evidenced by her stopping maintenance payments in 2016, forfeiting the property share), making any potential regulatory breach immaterial. The commission amounts (5.61% of charge for credit) were not high enough to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A analysis, considering that regulatory breaches do not automatically create unfairness. The key finding was that Miss T's purchase decisions were not motivated by the prospect of financial gain from the allocated property share, but rather by desire for holiday rights. This was evidenced by: (1) her stopping maintenance fee payments in 2016 despite forfeiting the allocated property share; (2) her testimony emphasizing family holidays rather than investment returns; (3) the late provision of testimony (October 2023, not 2019), creating risk of recollection being influenced by the Shawbrook judgment; (4) lack of specific detail about what was said regarding the investment element. The ombudsman found that even if the supplier breached Regulation 14(3) by marketing as an investment, this would not have been material to Miss T's purchasing decision. Regarding commission, the amounts (5.61% of charge for credit) were not high enough to render the relationship unfair, particularly as Miss T had pricing information and wanted the product.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website