Mitsubishi HC Capital UK PLC · DRN-6225589

The Complaint Mr L’s complaint is, in essence, that Mitsubishi HC Capital UK PLC (trading as Novuna) (Novuna) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with him under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying a claim under Section 75 of the CCA. Background to the Complaint Mr L purchased membership of the Fractional Property Owners Club (the ‘FPOC’) from a timeshare provider (the ‘Supplier’) on 14 February 2012 (the ‘Time of Sale’). He entered into an agreement with the Supplier to buy 2,898 Fractional Points at a cost of £11,199, which included £1,497 for the first year’s annual management charge (the ‘Purchase Agreement’). FPOC membership was asset backed – which meant it gave Mr L more than just holiday rights. It also included a share in the net sale proceeds of a property named on the Purchase Agreement (the ‘Allocated Property’) after his membership term was due to end. Mr L paid for his FPOC membership by taking finance of £11,199 from Novuna over 180 months (the ‘Credit Agreement’). The APR was 18.9%, the total charge for that credit was £20,450.40 and the total amount repayable in the event the finance ran to term was £31,649.40. But as Mr L appears to have repaid the loan in full on 2 October 2012, he repaid less than that. Mr L – using a professional representative (the ‘PR’) – wrote to Novuna on 2 July 2019 (the ‘Letter of Complaint’) to make a claim for misrepresentation under Section 75 of the CCA and complain about his credit relationship with Novuna being unfair to him under Section 140A of that Act. The reasons for that claim weren’t clear from the Letter of Complaint. However, those driving the suggestion that Mr L’s credit relationship was unfair to him were clearer. As they are likely to be familiar to both sides, I don’t intend to repeat them here in detail. But, in summary, the PR said the following on Mr L’s behalf: (1) The Supplier – when acting as credit broker – failed to adequately check that Mr L could afford to repay what he borrowed under the Credit Agreement. (2) The Supplier pressured Mr L into purchasing FPOC membership. The PR also complained about the payment of commission from Novuna to the Supplier at the Time of Sale – arguing, for instance, that the credit relationship between Novuna and Mr L was rendered unfair to him under Section 140A because, in keeping with the Supreme Court’s judgment in Plevin, the amount of commission was not disclosed to him beforehand. The PR also suggested that Mr L’s credit relationship with Novuna was unfair to him because the Supplier, when acting as a credit broker, owed him a fiduciary duty and breached that duty because it was paid commission by Novuna that he was not told about at the Time of Sale (i.e., secretly). And when making this allegation, the PR cited Hurstanger Ltd v Wilson [2007] EWCA Civ 299 (“Hurstanger”).

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Novuna responded in writing (the ‘FRL’) to the Letter of Complaint on 13 December 2022 after saying that it didn’t get the Letter of Complaint until 11 November that year. Novuna treated the letter in question as a complaint and it argued that Mr L’s allegations of misrepresentation and an unfair credit relationship were made out of time under the Limitation Act 1980 (the ‘LA’). Novuna also argued that a complaint about its decision to lend to Mr L at the Time of Sale was out of time under the separate six and three-year time limit that the Financial Ombudsman Service has to consider under its own rules. As a result, a complaint was referred to the Financial Ombudsman Service on 27 March 2023. The reasons for the complaint at that time concerned Mr L’s Section 75 claim for misrepresentation and complaint about an unfair credit relationship. But the PR also introduced a new Section 75 claim for breach of contract following the Supplier’s alleged liquidation. The complaint was then looked at by an investigator who, having considered the information before her, concluded that Mr L’s allegations of misrepresentation and an unfair credit relationship had been made too late under the LA. And while she wasn’t persuaded that a complaint by Mr L about Novuna’s decision to lend to him was likely to have been made out of time under the six and three-year time limit relied on in the FRL, she didn’t think it should succeed on its merits anyway. The PR disagreed with the investigator’s opinion and responded at length. It did so with reference to different consumers at times. But insofar as the PR’s response relates to Mr L’s complaint, I’ll summarise it here: (1) The timeshare in question was marketed and sold to Mr L by the Supplier at the Time of Sale as an investment contrary to Regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (the ‘Timeshare Regulations’). Yet he was led to believe by the Supplier that the sale was lawful. With that being the case, in the PR’s view, Novuna’s decision to reject Mr L’s complaint about an unfair relationship under Section 140A of the CCA continued to “conceal” that fact. (2) The Court of Appeal’s judgment in Canada Square Operations Ltd v Potter [2021] EWCA Civ 339 (‘Potter’) made it clear that the creation of an unfair relationship under Section 140A can amount to a breach of duty and, for the purposes of Section 32 of the LA, limitation doesn’t run until the facts related to the unfair relationship could have been discovered with reasonable diligence. But in the PR’s view, it would have been impossible for Mr L to make a competent and relevant claim until the law in relation to the sale of timeshares was clarified – which it was in R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin) (‘Shawbrook & BPF v FOS’). As an informal resolution to this complaint couldn’t be reached, it was referred for an ombudsman’s decision – which is why it was passed to me. I issued a provisional decision on 18 October 2023 (the ‘First PD’) in which I made it clear that, as Mr L’s Section 75 claim for breach of contract wasn’t put to Novuna before this complaint was referred to the Financial Ombudsman Service, my decision wasn’t concerned with that claim. I then went on to reject Mr L’s complaints about Novuna’s handling of his Section 75 claim for misrepresentation and its participation in a credit relationship that was unfair to him. I also found that, even if the PR was making a separate and free-standing complaint about Novuna’s decision to lend to Mr L, I wasn’t persuaded by the merits of such a complaint anyway. Following the First PD, the PR submitted a copy of a written statement belonging to Mr L

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dated 26 March 2019 – which, in response to an information request of mine, the PR elaborated on in an email dated 28 May 2024. That left me to finalise my thoughts on Mr L’s allegations of misrepresentation and an unfair credit relationship. But in light of the Supreme Court’s judgment in Smith and another (Appellants) v Royal Bank of Scotland (Respondent) [2023] UKSC 34, it was necessary to reconsider what I said in the First PD in relation to Mr L’s allegation of an unfair credit relationship. What’s more, it also became necessary to pay closer attention to the PR’s concerns about the payment of commission by Novuna to the Supplier in light of a pending Court of Appeal judgment in Johnson v FirstRand Bank Limited, Wrench v FirstRand Bank Limited and Hopcraft v Close Brothers [2024] EWCA Civ 1106 – which, as both sides now know, ended up going to the Supreme Court whose judgment was handed down on 1 August 2025. So, having considered what remains of this complaint with both of those judgments in mind, I issued another provisional decision on 26 February 2026 (the ‘Second PD’) in which I provisionally concluded the following: (1) Mr L’s complaint about a credit relationship with Novuna that was unfair to him (and all that it entails) does not fall under the Financial Ombudsman Service’s jurisdiction because it wasn’t first made within the time limits set out in the rules that govern the Service’s jurisdiction – which, on this occasion, is Rule 2.8.2 (2) of the Dispute Resolution Rules (‘DISP’) in the Financial Conduct Authority’s (the ‘FCA’) Handbook of Rules and Guidance. (2) The Supplier – when acting as credit broker – didn’t owe Mr L a fiduciary duty. So, the remedies that might be available at law in relation to the payment of secret commission weren’t, in my view, available to him. (3) Mr L’s complaint about Novuna’s handling of his misrepresentation claim under Section 75 of the CCA was made in time under DISP 2.8.2 R (2). But I remained of the view that Novuna didn’t act unfairly or unreasonably in relation to that claim. I also repeated what I said in the First PD about Mr L’s Section 75 claim for breach of contract. As it still didn’t appear to have been put to Novuna and then referred to the Financial Ombudsman Service as a complaint, I didn’t address it. Neither side had anything new to add in response to the Second PD. So, the complaint was passed back to me to finalise my thoughts. As the Second PD dealt with both my jurisdiction under the rules that apply to the Financial Ombudsman Service and the merits of what I thought remained of this complaint, I must now issue two decisions: one that finalises my thoughts on my jurisdiction (which is a Decision I have already issued) and this Final Decision setting out my thoughts on the remaining merits. My Findings I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done that, I’m still not persuaded that:

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(1) The Supplier – when acting as credit broker – owed Mr L a fiduciary duty. So, the remedies that might be available at law in relation to the payment of secret commission aren’t, in my view, available to him against Novuna. (2) Mr L’s complaint about Novuna’s handling of his misrepresentation claim under Section 75 of the CCA warrants a remedy. Mr L’s Section 75 Claim for Misrepresentation and Subsequent Complaint Section 75 of the CCA operates quite differently to Section 140A and, when it applies, it can give borrowers a very different ground for complaint against their lender. Whereas Section 140A imposes responsibilities on creditors in relation to the fairness of their credit relationships, Section 75 simply creates a financial liability that the creditor is bound to pay. Liability under Section 75 isn’t based on anything the lender does wrong, but upon the misrepresentations and breaches of contract by the supplier, for which Section 75 imposes on the lender a “like claim” to that which the borrower enjoys against the supplier. If the lender is notified of a valid Section 75 claim, it should pay its liability. And if it fails or refuses to do so, that failure or refusal can give rise to a complaint to the Financial Ombudsman Service. So, when a complaint is referred to the Financial Ombudsman Service on the back of an unsuccessful attempt to advance a Section 75 claim, the act or omission that engages the Service’s jurisdiction is the creditor’s handling of such a claim – rather than anything that occurs before the claim was put to the creditor, such as the supplier’s alleged misrepresentation(s) and/or breach(es) of contract. As a result, the 6 and 3 year time limit (under DISP 2.8.2 (2) R) to complain about an unsuccessful attempt to initiate a Section 75 claim doesn’t usually start until the respondent firm answers and refuses the claim. As I said in the Second PD, as Novuna doesn’t appear to have responded to Mr L’s Section 75 claim for misrepresentation until a number of years after it was made, prompting him to refer a complaint about the handling of the claim to the Financial Ombudsman Service in the meantime, the complaint was made in time for the purposes of the rules that dictate the Service’s jurisdiction. However, as I indicated in the First and Second PDs, I don’t think it would be fair or reasonable to uphold this complaint for reasons relating to Mr L’s Section 75 claim. As a general rule, creditors can reasonably reject Section 75 claims that they are first informed about after the claim has become time-barred under the LA as it wouldn’t be fair to expect creditors to look into such claims so long after the liability arose and after a limitation defence would be available in court. So, it is relevant to consider whether Mr L’s Section 75 claim was time-barred under the LA before he put it to Novuna. As I’ve said before, a claim under Section 75 is a “like” claim against the creditor. It essentially mirrors the claim the consumer could make against the Supplier. A claim for misrepresentation against the Supplier would ordinarily be made under Section 2(1) of the Misrepresentation Act 1967. And the limitation period to make such a claim expires six years from the date on which the cause of action accrued (see Section 2 of the LA). But a claim, like the one in question here, under Section 75 is also “an action to recover any sum by virtue of any enactment” under Section 9 of the LA. And the limitation period under that provision is also six years from the date on which the cause of action accrued.

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I still think the date on which the cause of action accrued was the Time of Sale. I say this because Mr L entered into the purchase of FPOC membership at that time based on the alleged misrepresentations of the Supplier – which it is said by the PR that he relied on. And as the loan from Novuna was used to help finance the purchase, it was when he entered into the Credit Agreement that he suffered a loss. Mr L first notified Novuna of his Section 75 claim on 2 July 2019. And as more than six years had passed between the Time of Sale and when he first put his claim to Novuna, I still don’t think there’s anything Novuna needs to do to put things right as far as that claim is concerned. Mr L’s Complaint about the Alleged Payment of Secret Commission While I’ve found, in a separate Decision, that I can’t consider the merits of Mr L’s complaint about his credit relationship with Novuna and all that it entails, one of the grounds on which that complaint was made constitutes a separate and freestanding complaint – which is what I’m considering here. The ground in question relates to whether Novuna is liable for the dishonest assistance of a breach of fiduciary duty by the Supplier because it took a payment of commission from Novuna without telling Mr L (i.e., secretly). The PR suggests that the Supplier, when acting as a credit broker, owed Mr L a fiduciary duty and breached that duty. And, as I’ve already said, when making this allegation, the PR cites Hurstanger. As both sides already know, the Supreme Court handed down an important judgment on 1 August 2025 in a series of cases concerned with the issue of commission: Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd [2025] UKSC 33 (‘Hopcraft, Johnson and Wrench’). And from my reading of the Supreme Court’s judgment, it doesn’t appear to be restricted to lenders and credit brokers operating in the motor-finance sector, or, for that matter, a particular type of commission arrangement between lenders and credit brokers. There were a number of commission arrangements in operation in the cases, including a discretionary commission arrangement and a ‘flat’ commission model, as part of which the commission paid to the credit broker was calculated as a percentage of the loan amount. So, in my view, the Supreme Court’s judgment sets out principles which apply to credit brokers other than car dealers. When considering allegations of undisclosed payments of commission like the one in this complaint, therefore, Hopcraft, Johnson and Wrench is relevant law that I’m required to consider under Rule 3.6.4 of DISP. But I still don’t think Hopcraft, Johnson and Wrench assists Mr L given the facts and circumstances of this complaint.

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As I said in the Second PD, the Supplier’s role as a credit broker at the Time of Sale wasn’t a separate service and distinct from its role as the seller of timeshares. It was simply a means to an end in the Supplier’s overall pursuit of a successful timeshare sale. I still can’t see that the Supplier gave an undertaking – either expressly or impliedly – to put to one side its commercial interests in pursuit of that goal when arranging the Credit Agreement. And as it wasn’t acting as an agent of Mr L but as the supplier of contractual rights he obtained under the Purchase Agreement, the transaction doesn’t strike me as one with features that suggest the Supplier had an obligation of ‘loyalty’ to him when arranging the Credit Agreement and thus a fiduciary duty. So, for the reasons I set out in the Second PD and repeated above, the remedies that might be available at law in relation to the payment of secret commission aren’t, in my view, available to Mr L. My Final Decision For the reasons set out above, I’m not persuaded that the Supplier – when acting as credit broker – owed Mr L a fiduciary duty that entitle him to remedies from Mitsubishi HC Capital UK PLC (trading as Novuna) that might otherwise be available at law in relation to the payment of secret commission. And I don’t think that Mr L’s complaint about the handling of his Section 75 claim for misrepresentation by Mitsubishi HC Capital UK PLC (trading as Novuna) should succeed either. In short, I don’t uphold what remains of the merits of this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr L to accept or reject my decision before 17 April 2026. Morgan Rees Ombudsman

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