Proper regulation of car financing in the best interests of consumers and motor industry – McGrath

Published on: 20 June 2017

Fianna Fáil Spokesperson on Finance, Michael McGrath has said that it is in the interests of both consumers and the motor industry to introduce proper regulation of Personal Contract Plans (PCPs) which are commonly used for the purchase of cars.

Deputy McGrath was commenting after receiving replies from the Competition and Consumer Protection Commission (CCPC) and the Central Bank highlighting the existing gaps in regulation of this form of financing.

Deputy McGrath commented, “I am very conscious of the importance of PCPs in the motor industry and I really believe it is in the best interests of both the consumer and the industry to ensure that this form of financing is properly regulated and is on a sustainable footing going forward.

“The CCPC has acknowledged that its role is limited to the licensing of the credit intermediaries. A key gap in regulation lies in the fact that the Central Bank’s Consumer Protection Code does not apply to hire purchase agreements or PCPs. This means in effect that a credit intermediary selling the PCP is not required to ‘know their customer’ in terms of assessing affordability and the suitability of the product being sold.

“The CCPC has confirmed it believes that PCPs should be subject to the same regulatory requirements as those that apply to all other financial products sold to consumers in Ireland. The CCPC has also made it clear that it has brought its concerns to the attention of the Department of Finance and the Central Bank. Despite this, there have been no moves by the Government or the Central Bank to ensure that PCPs are fully regulated.

“At present, we have a situation where the finance company entering into a PCP arrangement with a consumer is under no obligation to assess the suitability of the product for the consumer or indeed their ability to make the necessary repayments.

“It is deeply worrying that both the CCPC and the Central Bank have confirmed that no data has been collated on these plans.  As of now nobody in the CCPC, Central Bank or Department of Finance knows how many PCP’s exist and crucially how many customers are defaulting. It is in the best interest of all concerned that these issues are addressed,” concluded McGrath.

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