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

Decision detail

Summary

Ms M purchased a Fractional Club timeshare membership in November 2011 for £7,663 using a loan from the lender. The membership included a share in an allocated property's net sale proceeds. In September 2018, more than 6 years later, Ms M (through a professional representative) complained that the supplier had misrepresented the product as an investment and that the lender had unfairly participated in an unfair credit relationship. The ombudsman found the Section 75 misrepresentation claim was time-barred. On the merits, the ombudsman found no actionable misrepresentation and concluded that even if the supplier had breached the prohibition on marketing timeshares as investments, the credit relationship was not unfair because Ms M's purchase was not motivated by investment prospects, the commission was modest, and she would have proceeded regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. First, the Section 75 claim was rejected as time-barred, having been made more than 6 years after the time of sale when the cause of action accrued. Second, on the merits, the ombudsman found no actionable misrepresentation by the supplier regarding investment potential, guaranteed end dates, exclusivity, or necessity of the product. Third, regarding Section 140A unfairness, the ombudsman found that even if the supplier breached Regulation 14(3) by marketing the membership as an investment, this would not have rendered the credit relationship unfair because: (a) Ms M's purchase was not motivated by the prospect of financial gain; (b) the commission was modest at 5.61% of the charge for credit, unlike the 55% in Johnson; (c) Ms M knew the cost of borrowing, annual charges, and holiday entitlements; (d) the supplier was not acting as Ms M's agent and owed no fiduciary duty; and (e) Ms M would have proceeded with the purchase regardless of disclosure of commission. The ombudsman emphasized that regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round with their actual impact on the consumer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website