Not upheld: Other regulated complaint complaint against Mitsubishi HC Capital UK PLC (trading as Hitachi Capital)

Decision detail

Summary

Ms K purchased a Fractional Club timeshare membership for £15,430 in August 2018, financed through a credit agreement with Hitachi Capital. The timeshare included a share in net proceeds from an allocated property. Over four years later, Ms K complained that the supplier misrepresented the product as an investment, that the credit relationship was unfair under Section 140A, and that the lender failed to honour Section 75 claims. The ombudsman found that Ms K's original complaint made no mention of investment motivation, and her later recollections were unreliable. The ombudsman concluded that even if the supplier breached the Timeshare Regulations by marketing the product as an investment, this did not render the credit relationship unfair because Ms K's purchase decision was not materially motivated by investment prospects. The low commission (4%) and transparent pricing meant the relationship was fair. 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 (they do not). The key finding was that Ms K's purchase decision was not materially motivated by the prospect of financial gain from the property share, despite the supplier's possible breach of Regulation 14(3) in marketing the product as an investment. The ombudsman found Ms K's later recollections about investment motivation were unreliable, given they were provided after relevant case law and contradicted her original complaint. The commission of 4% was found to be low and not disproportionate, unlike the 55% commission in the Johnson case. Ms K had transparency on the cost of borrowing and knew what she was purchasing. The ombudsman concluded that even if regulatory breaches occurred, they did not render the credit relationship unfair given Ms K's actual motivations and the low impact on her decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website