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

Decision detail

Summary

Mr H complained that Novuna acted unfairly by being party to an unfair credit relationship and by declining a Section 75 misrepresentation claim relating to the purchase of Fractional Club timeshare membership financed by a £10,338 loan. The timeshare included a share in property sale proceeds (an investment element). Mr H alleged the Supplier misrepresented the product as an investment, that Novuna failed to conduct proper affordability checks, that he was subjected to high-pressure sales tactics, and that commission paid by Novuna to the Supplier was undisclosed. The ombudsman rejected all grounds, finding no actionable misrepresentation (Mr H's testimony was vague and inconsistent), the loan was affordable (Mr H maintained repayments), no evidence of pressure (Mr H had a cooling-off period he did not use), and the commission was low and would not have changed Mr H's decision to proceed. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, finding that regulatory breaches do not automatically render a credit relationship unfair. The key finding was that Mr H's purchase was not motivated by the prospect of financial gain from the property investment, despite the possibility that the Supplier may have marketed it as such. The ombudsman found Mr H's testimony vague and lacking detail regarding the investment element's importance to his decision. The commission was low (4% of loan amount) compared to the Supreme Court's threshold in Hopcraft, Johnson and Wrench (55%), and Mr H would have proceeded with the purchase regardless of commission disclosure. The ombudsman rejected allegations of irresponsible lending, finding the loan was affordable, and rejected pressure claims, noting Mr H had a cooling-off period he did not use.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website