Not upheld: Other regulated complaint complaint against Mitsubishi HC Capital UK Plc

Decision detail

Summary

Mr P purchased a Fractional Club timeshare membership for £12,951 (after trade-in) financed by a £15,763 credit agreement from Mitsubishi HC Capital UK Plc. The membership included a share in an allocated property's net sale proceeds. Mr P complained that the supplier misrepresented the product as an investment, that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974, and that the lender should have paid a Section 75 claim. The ombudsman found no actionable misrepresentation, as the investment element was not a false statement of fact and Mr P's purchase motivation was primarily holiday-related rather than investment-focused. Although accepting the possibility the supplier breached Regulation 14(3) by marketing the product as an investment, the ombudsman concluded this did not render the credit relationship unfair because Mr P's decision was not materially impacted by investment prospects. The undisclosed commission of £630.52 (4% of borrowing) was found insufficient to create unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any regulatory breaches or unfair practices materially impacted the consumer's decision to enter the credit relationship. While accepting the possibility that the supplier breached Regulation 14(3) by marketing the product as an investment, the ombudsman found that Mr P's purchase motivation was primarily holiday-related rather than investment-focused, evidenced by his belief he was buying a trial membership, his quick attempt to relinquish it, and his lack of concern about the investment element when trying to dispose of it. The ombudsman distinguished the case from the Supreme Court's Johnson decision on commission grounds, finding the commission level (4%) was not disproportionately high and would not have deterred Mr P from borrowing. The ombudsman rejected allegations of misrepresentation under Section 75, finding no false statements of existing fact regarding investment potential, guaranteed end dates, or exclusivity. Regarding affordability, the ombudsman found no evidence the lending was unaffordable. The ombudsman also rejected pressure allegations, noting Mr P had a cooling-off period he did not use.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website