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

Decision detail

Summary

Ms M complained that Novuna acted unfairly by being party to an unfair credit relationship and by rejecting her Section 75 claim for misrepresentation regarding a Fractional Club timeshare membership purchased on 19 April 2018 for £21,130, financed by a £21,948 loan. Ms M alleged the Supplier misrepresented the membership as an investment and breached Regulation 14(3) of the Timeshare Regulations. The ombudsman found the Section 75 claim was time-barred as it was raised more than six years after the cause of action arose. On the Section 140A unfair relationship claim, the ombudsman concluded that even if the Supplier had breached Regulation 14(3), this would not have rendered the credit relationship unfair because Ms M's purchase decision was primarily motivated by holiday benefits and specific offers (such as a luxury catamaran), not by investment potential. The undisclosed commission of £877.92 (4% of the loan) was not sufficiently high to create unfairness. 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. The key finding was that even if the Supplier breached Regulation 14(3) by marketing the membership as an investment, this would not have rendered the credit relationship unfair because Ms M's purchase decision was primarily motivated by the holiday benefits and specific offers (such as the luxury catamaran), not by investment potential. The ombudsman found that Ms M would have proceeded with the purchase regardless of any investment element. The commission payment was low (4% of amount borrowed) and did not create a sufficiently extreme inequality of knowledge. The Section 75 claim was time-barred under the Limitation Act 1980, as it was raised more than six years after the cause of action arose.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website