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

Decision detail

Summary

Mr S purchased Fractional Club timeshare membership for £15,430 in June 2019, financed by a loan from Novuna. He later complained that the Supplier misrepresented the membership as a profit-yielding investment in breach of Timeshare Regulations, and that Novuna was party to an unfair credit relationship due to undisclosed commission and regulatory breaches. The ombudsman found no actionable misrepresentation, as statements about the investment element were not untrue and any opinions about profit were honestly held. Although the Supplier may have breached the prohibition on marketing timeshares as investments, the ombudsman found Mr S's purchase was primarily motivated by holiday options rather than investment potential. The undisclosed commission of £617.20 (4-5.94% of credit) was found to be low and not disproportionate, and Mr S had sufficient information about loan costs. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation under Section 75 because: (1) statements about holiday availability were not untrue given demand limitations; (2) describing membership as an investment was not untrue as it included a property share; (3) any opinion about profit potential was honestly held. Under Section 140A, the credit relationship was not unfair because: (1) there was insufficient evidence of coercion or undue influence; (2) even if Regulation 14(3) was breached, Mr S's purchase was primarily motivated by holiday options, not investment potential; (3) the commission was low (4-5.94%) compared to the Johnson case (55%); (4) Mr S had full information about the loan cost and could compare alternatives; (5) regulatory breaches do not automatically create unfairness and must be considered in the round with their impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website