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

Decision detail

Summary

Mr A purchased a trial timeshare membership in July 2018 and upgraded to a Fractional Club membership in December 2018, financing both through the lender. The Fractional Club membership included a share in an allocated property's net sale proceeds. Mr A stopped paying maintenance fees during the COVID-19 pandemic after becoming unemployed. In August 2023, through a professional representative, Mr A complained that the lender acted unfairly by rejecting Section 75 claims for misrepresentation and breach of contract, and by participating in an unfair credit relationship under Section 140A. The complainant alleged the supplier breached Regulation 14(3) by marketing the timeshare as an investment and that undisclosed commission arrangements rendered the credit relationship unfair. The ombudsman rejected all grounds of complaint, finding that Mr A's purchase was motivated by holiday accommodation rather than investment returns, that the commission was low and properly disclosed through credit information, and that regulatory breaches do not automatically create unfairness under Section 140A without material impact on the complainant's decision-making.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically created unfairness. The key reasoning was that even if the supplier breached Regulation 14(3) by marketing the timeshare as an investment, this was not material to Mr A's purchasing decision because the evidence suggested he was motivated by better holiday accommodation for his family rather than financial gain. The ombudsman found that Mr A's own testimony indicated he was persuaded to upgrade for holiday purposes, not investment returns. Regarding commission, the ombudsman distinguished the case from Johnson on the basis that the commission was low (4% of amount borrowed, 3.71% of charge for credit) and Mr A had full information about the cost of credit. The ombudsman concluded that regulatory breaches must be considered in the round and their impact on the complainant assessed, not treated as automatically creating unfairness.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website