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

Decision detail

Summary

Mr M complained that Mitsubishi HC Capital UK PLC acted unfairly by financing a timeshare purchase that was allegedly misrepresented as an investment in breach of Regulation 14(3) of the Timeshare Regulations, and by rejecting his Section 75 claim. The timeshare (Fractional Club membership) cost £8,642 and included a share in net sale proceeds of a property. The lender paid £345.68 commission to the supplier without full disclosure. The ombudsman found no actionable misrepresentation, and while acknowledging a possible breach of the investment marketing prohibition, concluded this did not render the credit relationship unfair because Mr M's purchase decision was not materially motivated by investment prospects. The modest commission and Mr M's understanding of the credit terms meant the relationship was not unfair under Section 140A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically created unfairness. While acknowledging that a breach of Regulation 14(3) was possible, the ombudsman found this was not determinative without evidence that the breach materially influenced Mr M's decision to purchase. The ombudsman placed limited weight on Mr M's late statement (provided in 2024, three years after complaint) due to risk of recollection being influenced by subsequent case law. The commission of £345.68 (4% of borrowing, 5.94% of charge for credit) was found to be low and not disproportionate, distinguishing it from the 55% commission in the Johnson case. The ombudsman found Mr M understood the cost of the credit agreement and had no obvious alternative means of payment. The ombudsman concluded that even if regulatory breaches occurred, Mr M would likely have proceeded with the purchase regardless.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website