Not upheld: Goods and services under S75 complaint against Mitsubishi HC Capital UK PLC

Decision detail

Summary

The estate of Mr N complained that Mitsubishi HC Capital UK PLC acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims for misrepresentation and breach of contract relating to a £19,438 timeshare finance agreement. The timeshare (Fractional Club membership) was purchased on 1 August 2018 for £37,399 and included both holiday rights and a share in an Allocated Property. The ombudsman found the Section 75 misrepresentation claim was outside the statutory £30,000 limit and the breach of contract claim was not substantiated. On the Section 140A unfair relationship claim, the ombudsman found that even if the supplier had breached Regulation 14(3) by marketing the product as an investment, the evidence showed the consumers were primarily motivated by holiday benefits, not financial gain, and therefore the credit relationship was not unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, examining whether the credit relationship was unfair in its entirety rather than treating regulatory breaches as automatically creating unfairness. The key finding was that even if the supplier breached Regulation 14(3) by marketing the product as an investment, this would not have rendered the credit relationship unfair because the evidence did not support that the prospect of financial gain was an important motivating factor in the purchase decision. The contemporaneous supplier notes and Mrs N's statement indicated the primary motivation was obtaining improved holiday rights. The ombudsman found the consumers were informed of key terms (borrowing amount, interest cost, management charges, holiday entitlements), had a 14-day cooling-off period they did not use, and made a deliberate choice to upgrade their membership. The ombudsman distinguished the case from Hopcraft, Johnson and Wrench on the basis that no commission was paid at the time of sale and there was no evidence of a fiduciary duty or concealed commercial tie.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website