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

Decision detail

Summary

Mrs S purchased Fractional Club timeshare membership in December 2018 for £18,699, financed by a £22,971 loan from the lender. The membership provided holiday rights and a share in an allocated property's net sale proceeds. Mrs S 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 properly assess affordability, and that the lender's undisclosed commission to the supplier rendered the credit relationship unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found that while the supplier may have breached Regulation 14(3), Mrs S's purchase was primarily motivated by holiday accommodation rather than investment returns, as evidenced by her inconsistent testimony about the allocated property and her cessation of maintenance payments when unable to take holidays. The ombudsman rejected all grounds of complaint, finding no misrepresentation, no breach of contract, and no unfair credit relationship.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any breaches or failings rendered the credit relationship unfair. While acknowledging that the supplier may have breached Regulation 14(3) by marketing membership as an investment, the ombudsman found this was not causative of Mrs S's purchase decision. The evidence showed Mrs S was primarily motivated by holiday accommodation rather than investment returns, as demonstrated by her inconsistent testimony about the allocated property, her successful use of holiday points, and her cessation of maintenance payments when unable to take holidays. The ombudsman rejected arguments about pressure, inadequate affordability checks, and undisclosed commission, finding the commission amount (3.7% of credit charge) was not disproportionate and Mrs S had sufficient information to understand the cost of credit. The ombudsman distinguished the case from Johnson on the basis that the commission was low, Mrs S had pricing information, and the supplier's dual role as seller and broker did not create a fiduciary duty.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website