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

Decision detail

Summary

Mr M purchased a Fractional Club timeshare membership for £10,338 in February 2018, financed through a credit agreement with the lender. The timeshare included holiday rights and a share in an allocated property's net sale proceeds. In August 2023, Mr M complained that the supplier had misrepresented the product as an investment, that the lender had breached Section 75 of the Consumer Credit Act by failing to acknowledge claims, and that the credit relationship was unfair under Section 140A due to possible breach of timeshare marketing regulations and undisclosed commission. The ombudsman found no factual misrepresentation, no breach of contract, and that even if the supplier had breached the prohibition on marketing timeshares as investments, Mr M's purchase was not motivated by investment prospects but by desire for holiday accommodation. The low commission (£413.52, representing 4% of borrowing) and Mr M's knowledge of credit terms meant the relationship was not unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to assess fairness under Section 140A, considering the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and commission arrangements. While acknowledging that a breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments) was possible, the ombudsman found this was not determinative. The key finding was that Mr M's purchase was not motivated by the prospect of financial gain from the allocated property share, as evidenced by his own testimony which the ombudsman found implausible regarding investment representations. The ombudsman rejected the argument that regulatory breaches automatically create unfairness, citing Supreme Court authority that such breaches must be considered in the round. The commission of £413.52 (4% of borrowing) was found to be low and not disproportionate, distinguishing this case from the high commission (55%) in Johnson. The ombudsman concluded that even with full disclosure of commission, Mr M would have proceeded with the loan as he wanted the timeshare and had no alternative means of payment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website