Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance, formerly Hitachi Personal Finance)

Decision detail

Summary

Mrs D purchased Fractional Club timeshare membership on 11 October 2018, financed through a credit agreement with Novuna. The membership included a share in the net sale proceeds of an Allocated Property. Mrs D complained in July 2021 that the Supplier had misrepresented the product and breached contract, and that Novuna was party to an unfair credit relationship. She alleged the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, failed to provide adequate information about ongoing costs, and that Novuna failed to disclose commission payments. The ombudsman found insufficient evidence of misrepresentation or breach of contract. Although acknowledging a possible breach of Regulation 14(3), the ombudsman concluded the credit relationship was not unfair because Mrs D's written recollections were unreliable, the prospect of financial gain was not a motivating factor in her purchase, the commission (4% of amount borrowed) was not disproportionate, and regulatory breaches do not automatically create unfairness under Section 140A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found insufficient evidence of misrepresentation or breach of contract by the Supplier. Regarding the Section 140A unfair credit relationship claim, while acknowledging a possible breach of Regulation 14(3) (prohibition on marketing timeshares as investments), the ombudsman concluded that even if such a breach occurred, it did not render the credit relationship unfair because: (1) Mrs D's written recollections were unreliable and potentially coloured by subsequent case law; (2) the prospect of financial gain was not an important motivating factor in her purchase decision; (3) the commission paid (4% of amount borrowed) was not high enough to be disproportionate; (4) the Supplier did not owe Mrs D a fiduciary duty; and (5) regulatory breaches do not automatically create unfairness under Section 140A. The ombudsman applied the Supreme Court's guidance from Plevin and Hopcraft, Johnson and Wrench, emphasizing that the focus must be on whether the relationship was unfair in the round, not on technical regulatory breaches alone.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website