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

Decision detail

Summary

Mr O purchased a Fractional Club timeshare membership for £16,430 during a holiday in Tenerife in August 2019, financed by a loan from Novuna Personal Finance. The membership included a share in an allocated property's net sale proceeds after 16 years. Mr O complained that the supplier misrepresented the product as an investment in breach of the Timeshare Regulations, that the lender failed to properly handle Section 75 claims, and that the credit relationship was unfair under Section 140A. The ombudsman found no actionable misrepresentation, no breach of contract, and no unfair credit relationship. Although a breach of Regulation 14(3) was possible, the ombudsman found Mr O's purchase was not motivated by investment prospects, making any such breach immaterial. The ombudsman rejected Mr O's testimony about promised profit figures as implausible and inconsistent, and found the low commission (4%) and clear pricing information did not render the relationship 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 all the circumstances. While acknowledging that a breach of Regulation 14(3) (prohibition on marketing timeshares as investments) was possible, the ombudsman found this was not determinative. The key finding was that Mr O's purchase was not motivated by the prospect of financial gain from the allocated property share. The ombudsman rejected Mr O's testimony about being promised specific profit figures (5-6%), finding it implausible given inconsistencies (he recalled 19 years but the term was 16 years), the fact he stopped paying maintenance fees in 2022, and the absence of such promises in written materials. The commission of 4% was found to be low and not disproportionate, particularly given Mr O wanted the membership and had no alternative means to pay. The ombudsman found no evidence of pressure that significantly impaired Mr O's ability to exercise choice, noting he had a cooling-off period he did not use and referred others through the referral scheme. Regulatory breaches do not automatically create unfairness under Section 140A; they 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