Not upheld: Other regulated complaint complaint against Mitsubishi HC Capital UK PLC, trading as Novuna Personal Finance

Decision detail

Summary

Mr B complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by being party to an unfair credit relationship and by rejecting his Section 75 claim for misrepresentation. Mr B had purchased Fractional Club timeshare membership for £4,597 in September 2019, financed by a £23,196 loan. The membership included a share in net sale proceeds of an allocated property. Mr B alleged the supplier misrepresented the product as an investment and that the lender failed to disclose commission of £927.84 paid to the supplier. The ombudsman found no actionable misrepresentation because the contractual paperwork made no profit promises and evidence suggested Mr B was motivated by special offers rather than investment returns. On the unfair credit relationship claim, the ombudsman concluded that even if the supplier breached the prohibition on marketing timeshares as investments, this was not material to Mr B's decision. The commission of 4% was not disproportionately high, Mr B had adequate information on costs, and the supplier owed no fiduciary duty. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation because: (1) the contractual paperwork made no promises of profit; (2) Mr B's share in the allocated property clearly constituted an investment offering prospect of financial return; (3) Mr B provided little evidence of specific false statements of fact; and (4) evidence suggested his purchase was motivated by special offers and getting money back, not profit. On Section 140A, the ombudsman concluded the credit relationship was not unfair because: (1) there was insufficient evidence of pressure preventing Mr B's choice; (2) even if Regulation 14(3) was breached (marketing as investment), it was not material to his decision; (3) the commission of 4% was not disproportionately high compared to the Supreme Court's guidance; (4) Mr B had information on price, cost of credit, and APR; and (5) the supplier was not acting as Mr B's agent and owed no fiduciary duty. Regulatory breaches do not automatically create unfairness under Section 140A; their impact must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website