Study of PCPs must lead to better regulation – McGrath

Published on: 17 July 2017

Fianna Fáil Spokesperson on Finance, Michael McGrath has welcomed today’s announcement by the Consumer Protection and Competition Commission (CCPC) that it has commenced a study of the Personal Contract Plan (PCP) car finance market but has said the study needs to lead to better regulation of the finance product.

Deputy McGrath commented, “While the commencement of this study is to be welcomed, the key issue is the obvious gap in the regulation of PCPs from a consumer perspective. 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.

“An obvious gap in the current regulatory regime 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 a 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 to me previously 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 also concerning 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 PCPs exist and crucially how many customers are defaulting. It is in the best interest of all concerned that these issues are addressed.

“Today’s announcement of a study is a welcome step but the real onus is on the Central Bank and the Government to ensure PCPs are comprehensively regulated,” concluded McGrath.

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