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

Decision detail

Summary

Mr B and Mrs B purchased a Fractional Club timeshare membership for £59,699 on 20 May 2012, with Mr B taking out a £5,918 loan from Novuna to help fund the purchase. In February 2017, Mr B complained that Novuna was party to an unfair credit relationship and rejected a section 75 claim for misrepresentation and breach of contract by the Supplier. The ombudsman found that the section 75 claim failed because the purchase price exceeded the £30,000 limit and there was insufficient evidence of actionable misrepresentation. Although the ombudsman acknowledged a possible breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments), this did not render the credit relationship unfair because Mr B's own statement indicated his primary motivation was holiday options rather than investment returns, and he would have proceeded regardless. The undisclosed commission of £606.60 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 analysis, considering that regulatory breaches do not automatically create unfairness. The key reasoning was: (1) Mr B's section 75 claim failed because the purchase price exceeded the £30,000 limit and there was insufficient evidence of actionable misrepresentation; (2) while a possible breach of Regulation 14(3) of the Timeshare Regulations existed (marketing as investment), this was not determinative because Mr B's own statement showed his primary motivation was holiday options, not investment returns; (3) the commission of £606.60 (9.16% of charge for credit) was not high enough to render the relationship unfair, particularly given Mr B wanted the membership and had no obvious alternative means to pay; (4) Mr B successfully maintained repayments with no evidence of difficulty, suggesting the lending was affordable; (5) causation was important - if Mr B would have proceeded regardless of any breach, the breach could not render the relationship unfair; (6) Mr B was given a 14-day cooling-off period and did not cancel, suggesting he genuinely wanted the product.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website