Minister Donohoe announces Government approval to draft legislation to regulate PCP and other credit type agreements

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, today (Wednesday) announced Government approval to draft legislation to provide that all firms which offer personal contract plan (PCP), hire purchase and other similar credit type agreements to consumers will be required to be authorised by the Central Bank of Ireland as retail credit firms.

The Tutty report on the PCP market (which was commissioned by the Minister for Finance and published last November) outlined a number of recommendations to improve the level of consumer protection in relation to the provision of PCP and hire purchase agreements.

The only recommendation which cannot be implemented within the existing legislative framework is the key one which says that the relevant provisions of the Central Bank’s Consumer Protection Code, in particular the provisions which require lenders to assess the suitability of the product for the consumer and also the ability of the borrower to repay the debt over the duration of the credit agreement, should be extended to all the providers of hire purchase/PCP agreements to consumers. However, as some of the providers of these agreements currently fall outside the authorisation and full regulatory remit of the Central Bank, the Bank is not able to apply its codes to these unauthorised firms.

The proposed legislation intends to address this gap and to provide that all the providers of credit type agreements to consumers and other relevant persons will now be required to be authorised by the Central Bank.

Welcoming Government approval to draft the Bill, Minister Donohoe said:

“As all the providers of PCP and other similar agreements to consumers will now have to be authorised by the Central Bank, the Bank will then be able to apply its Consumer Protection Code and its other consumer protection powers to such firms. This will improve the level of protection available to the consumers of such agreements”.

ENDS

Notes to Editors

The Tutty report on PCPs was published in November 2018 and is attached https://www.gov.ie/en/publication/5391e5-review-of-regulation-of-personal-contract-plans/).
The only conclusion contained in the report which cannot be implemented within the current legislative framework is the one which recommends that the Central Bank Consumer Protection Code requirement that firms check the financial capacity of the customer taking on a credit agreement should apply to all firms providing PCP and hire purchase agreements (the Central Bank cannot do this at the moment because some of the providers of these agreements are not subject to the authorisation and the full regulatory remit of the Bank).
The General Scheme primarily provides that all the providers of PCP, hire purchase and other similar credit type agreements to consumers and other relevant persons will be required to be authorised by the Central Bank of Ireland as retail credit firms. This will then give the Central Bank the legislative basis to apply its Consumer Protection Code to all firms which provide PCP agreements. (It is currently proposed that this will be done by amending Part V of the Central Bank Act 1997 which already provides for the authorisation of retail credit firms where they provide cash loans. Certain consequential amendments to the Consumer Credit Act 1995 may also be necessary).
The General Scheme will now be submitted to the Office of the Parliamentary Counsel to draft a Bill.