Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 connected lender liability; potential breach of Timeshare Regulations; undisclosed commission complaint against Mitsubishi HC Capital UK PLC

Decision detail

Summary

Mr B purchased Fractional Club timeshare membership for £11,995 in July 2018, financed by Mitsubishi HC Capital UK PLC, and complained in January 2020 that the supplier had misrepresented the product and that the credit relationship was unfair. He alleged the supplier breached Timeshare Regulations by marketing the product as an investment, failed to conduct proper affordability checks, applied pressure during the sales process, and that the lender failed to disclose commission payments. The ombudsman found no actionable misrepresentation under section 75 as the product's substance and investment potential were factually accurate. Under section 140A, the ombudsman rejected unfairness claims on multiple grounds: the lending was affordable, there was no evidence of impaired choice, Mr B's purchase was not motivated by investment returns (his late statement being unreliable), and the 4% commission was low and would not have deterred the purchase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier under section 75, as stating the membership had substance and could be sold at profit was factually accurate given it included holiday access and a property share. Regarding section 140A unfairness, the ombudsman rejected arguments about affordability (finding no evidence the loan was unaffordable), pressure (finding insufficient evidence of impaired choice), and breach of Timeshare Regulations (finding that even if breached, Mr B's purchase was not motivated by investment potential, as evidenced by his late and unreliable statement provided over five years after the sale). The commission of £479.80 (4% of borrowing) was found to be low and not disproportionate, and the supplier did not owe Mr B a fiduciary duty when acting as credit broker. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench but distinguished the case on the basis of the much lower commission level and lack of evidence of commercial concealment or disproportionate cost.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website