Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 claims for misrepresentation; alleged breach of Timeshare Regulations; undisclosed commission arrangements complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mr V purchased Fractional Club timeshare memberships in May 2016 and May 2017, financing both purchases with credit from the lender. In September 2024, more than six years after both purchases, Mr V made claims under section 75 of the Consumer Credit Act alleging misrepresentation and under section 140A alleging an unfair credit relationship. The lender rejected the section 75 claims as time-barred under the Limitation Act 1980. The ombudsman upheld the lender's application of the limitation period, finding the PR provided no persuasive evidence to extend the time limit under section 32. Regarding the section 140A claim, the ombudsman found that even if the supplier had breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, this would not render the credit relationship unfair because Mr V's purchase decision was not motivated by the prospect of financial gain. The ombudsman noted Mr V made no mention of the 2017 purchase in his statement, continued to use the membership regularly, and the supplier's notes indicated the upgrade was for flexibility. The small commission payments (1.7-2.5% of amounts borrowed) did not create unfairness under the Supreme Court's principles in Hopcraft, Johnson and Wrench. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Limitation Act 1980 to the section 75 claims, finding that both the 2016 and 2017 purchase claims were made more than six years after the cause of action accrued, placing them outside the statutory limitation period. The PR failed to provide persuasive evidence to support an extension under section 32 of the Limitation Act (fraud, concealment, or mistake). Regarding the section 140A unfair credit relationship claim, the ombudsman found that even if the supplier had breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, this would not have rendered the credit relationship unfair because Mr V's purchase decision was not motivated by the prospect of financial gain. The ombudsman noted that Mr V made no mention of the 2017 purchase in his written statement, continued to holiday regularly with the supplier after the 2016 purchase, and the supplier's notes indicated the 2017 upgrade was for more flexibility. The commission payments were small (1.7% and 2.5% of amounts borrowed) and did not create a sufficiently extreme inequality of knowledge. The ombudsman applied the Supreme Court's reasoning in Hopcraft, Johnson and Wrench, which confirmed that regulatory breaches do not automatically create unfairness under section 140A; such breaches must be considered in the round with regard to their impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website