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

Decision detail

Summary

Mr H purchased a Fractional Club timeshare membership for £7,900 in January 2014, financed through a credit agreement with the lender. The membership included a share in an allocated property's net sale proceeds. Mr H complained in February 2019 that the lender acted unfairly by being party to an unfair credit relationship and by rejecting his Section 75 claims for misrepresentation. The ombudsman found that while the supplier may have breached regulations by marketing the product as an investment, Mr H's primary motivation was to take more holidays (increasing from 2 to 4 weeks annually), not to profit from the property share. The commission arrangement (9.75% of borrowed amount) was low and adequately disclosed through credit agreement terms. The ombudsman concluded the credit relationship was not unfair and the lender correctly rejected the Section 75 claims, so the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any alleged breaches (such as potential breach of Regulation 14(3) of the Timeshare Regulations regarding marketing as an investment) were material to Mr H's purchasing decision. The key finding was that Mr H's primary motivation was to take more holidays in better resorts, not to make a financial profit from the allocated property share. The ombudsman noted that Mr H increased his holiday frequency from approximately 2 weeks per year to 4 weeks per year after upgrading to Fractional Club membership, demonstrating the holidays were the main driver. The commission paid (9.75% of borrowed amount) was found to be low compared to the Supreme Court's guidance in Johnson, and Mr H had sufficient information about the cost of the credit agreement. The ombudsman concluded that even if regulatory breaches occurred, they would not have changed Mr H's purchasing decision, and therefore did not render the credit relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website