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

Decision detail

Summary

Mr A complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) acted unfairly by participating in an unfair credit relationship and rejecting Section 75 claims regarding his 2018 purchase of Fractional Club timeshare membership financed by a £18,311 loan. The Fractional Club membership included holiday rights and a share in net sale proceeds of an allocated property. Mr A alleged the Supplier misrepresented the product as an investment, breached Regulation 14(3) of the Timeshare Regulations, applied pressure during the sales process, failed to conduct proper affordability checks, and that an undisclosed commission of £732.44 was paid to the Supplier. The ombudsman found the Section 75 claims were time-barred (made over six years after purchase), no actionable misrepresentations occurred, and the credit relationship was not unfair under Section 140A because Mr A's purchase was motivated by holiday accommodation rather than investment returns, causation for any regulatory breach was not established, and the commission was not disproportionate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a balance of probabilities standard in an inquisitorial jurisdiction. On Section 75 claims, the six-year limitation period under the Limitation Act 1980 had expired, making the Lender's rejection fair. On the substance of alleged misrepresentations, the ombudsman found: (1) stating Fractional Club membership was an investment that could be sold at profit was not untrue as it involved a share in property; (2) no guarantee of property sale on a specific date was promised; (3) no evidence that sales representatives knew or should have known representations were false; (4) holiday availability limitations were disclosed in sales paperwork. On Section 140A unfair credit relationship claims, the ombudsman found: (1) lending was affordable for Mr A; (2) no credible evidence of pressure preventing Mr A's choice to purchase; (3) Mr A did not use the 14-day cooling-off period to cancel; (4) the prospect of financial gain was not an important motivating factor for Mr A's purchase, as evidenced by his own statement focusing on holiday accommodation rather than investment returns; (5) even if Regulation 14(3) was breached by marketing as an investment, causation was not established because Mr A's purchase was not motivated by investment prospects; (6) the commission of £732.44 (4% of borrowing, 3.71% of charge for credit) was not high enough to render the relationship unfair, particularly in contrast to the 55% commission in the Supreme Court's Johnson case; (7) no fiduciary duty was owed by the Supplier as credit broker; (8) information failings about ongoing costs and property details did not materially affect Mr A's decision given his primary motivation was holiday accommodation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website