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

Decision detail

Summary

Mr G complained that Novuna Personal Finance acted unfairly by being party to an unfair credit relationship and declining a Section 75 claim relating to his purchase of Fractional Club timeshare membership financed by a £17,991 loan in August 2019. The timeshare included holiday rights and a share in property net sale proceeds. Mr G alleged the supplier misrepresented the membership as an investment in breach of Timeshare Regulations and that undisclosed commission rendered the credit relationship unfair. The ombudsman found no actionable misrepresentation, as telling prospective members they were investing in a property share was factually accurate. Although the supplier may have breached the prohibition on marketing timeshares as investments, this did not render the credit relationship unfair because Mr G's purchase was primarily motivated by holiday benefits rather than investment potential, as evidenced by his prior trial membership and annual holiday use. The commission of £719.64 (4% of loan) was not high enough to create unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have marketed the membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, this did not render the credit relationship unfair because Mr G's purchase decision was primarily motivated by the holiday benefits rather than investment potential. The evidence showed Mr G already held a trial membership, was taking his first holiday overseas, and used the membership for holidays each year. His written statement was vague and provided limited detail about investment motivation. The commission paid (£719.64 or 4% of loan) was not high enough to create unfairness under Section 140A principles established in Hopcraft, Johnson and Wrench. Mr G was provided with information about the price of membership and cost of credit, allowing him to understand and compare the offer. No fiduciary duty was owed by the supplier when acting as credit broker. Regulatory breaches do not automatically create unfairness; their consequences must be considered in the round with impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website