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

Decision detail

Summary

Mr P purchased a Fractional Club timeshare membership for £12,951 (financed by a £15,763 loan) in July 2017, believing it was a trial membership offering holiday rights and a share in property proceeds. He later complained that the supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that the lender failed to conduct proper affordability checks, and that an undisclosed commission of £630.52 was paid to the supplier. The ombudsman found no actionable misrepresentation under Section 75 because the investment element was genuine. While accepting the possibility of a Regulation 14(3) breach, the ombudsman concluded it was not material to Mr P's decision-making, as he appeared motivated by holiday access rather than investment returns. The undisclosed commission was found to be low (4% of loan) and would not have deterred borrowing. Accordingly, the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any regulatory breaches or unfair practices materially impacted the consumer's decision to enter the credit relationship. While accepting the possibility that the supplier breached Regulation 14(3) by marketing the membership as an investment, the ombudsman found this was not material to Mr P's purchase decision because the evidence suggested Mr P believed he was purchasing a trial membership for holiday purposes, not as an investment vehicle. The ombudsman rejected the Section 75 misrepresentation claim because the statements about investment potential were not false (the property share was genuinely an investment asset). Regarding the undisclosed commission, the ombudsman applied the Supreme Court's Hopcraft/Johnson/Wrench principles and found the commission was low (4% of loan amount) and would not have deterred Mr P from borrowing, distinguishing it from the 55% commission in Mr Johnson's case. The ombudsman concluded that even if regulatory breaches occurred, they did not render the credit relationship unfair given their limited material impact on Mr P's decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website