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

Decision detail

Summary

Ms D purchased Fractional Club timeshare membership for £12,999 in April 2018, financed by a £16,355 loan from the lender. She complained that the supplier misrepresented the product as an investment and that the lender was party to an unfair credit relationship. Ms D alleged pressure during a 9-hour sales presentation and dissatisfaction with accommodation standards on subsequent holidays. The ombudsman found no actionable misrepresentation under Section 75 because the investment element (property share) was genuine, and no breach of contract regarding holiday availability. Under Section 140A, although the supplier may have breached regulations prohibiting marketing timeshares as investments, the ombudsman found Ms D's purchase was motivated primarily by holiday benefits, not investment returns, making any regulatory breach immaterial to the fairness of the credit relationship. The modest undisclosed commission (4% of borrowing) did not render the relationship unfair.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically create unfairness (they do not). The key finding was that Ms D's purchase motivation was primarily driven by holiday benefits and the desire for high-end accommodation, not by the prospect of investment returns. Even if the supplier breached Regulation 14(3) by marketing the product as an investment, this was not material to her decision. The commission was relatively modest (4% of amount borrowed) compared to the 55% in the Supreme Court's Johnson case, and Ms D had sufficient information about the cost of credit to make an informed comparison. The pressure alleged during the sales presentation was not sufficiently evidenced by her failure to use the cooling-off period.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website