Thursday, 15 July 2021
Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021: Second Stage (Resumed)
This Bill is crucial. It is protection for consumers and it cannot come quickly enough. Bringing in additional regulation and consumer protections across newer and emerging credit products and companies is now more important than ever. We have seen an explosion in non-cash loans and credit being provided indirectly to the consumer, for example, in buy now, pay later agreements. In particular we have seen it with the surge in online activity during the pandemic.
I welcome the further consumer protections when it comes to personal contract plans, PCPs. I am not an expert but experts have expressed the opinion that many motorists really do not understand their liability. We must do all we can to ensure there is protection for them. We have to look at communication as well. We need to ensure there is good communication and I appeal to the Minister of State to look at this as well.
The Tutty report recommended that further consumer protections in respect of PCP agreements be introduced. We can see why. The Central Bank indicated in October 2020 that data for the total car finance market in Ireland, which includes Irish resident banks and non-banks, showed that as of September 2019 there were 76,153 PCP loans outstanding, representing a total outstanding stock of nearly €1.5 billion. At the end of February 2020, the data showed that the outstanding amount of car finance consumer credit advanced to households by Irish resident banks by way of PCP was over €1.5 billion in respect of 62,078 contracts. One quarter of all car financing is done through PCP agreements. Consequently, this legislation is important.
Spreading the cost of buying a car holds great appeal for most motorists. While conventional hire purchase divides the total amount into equal monthly payments over a period of years, the PCP involves a series of smaller monthly payments with a larger payment at the end of the agreement. That is important and we need to highlight it. Although some PCP products are underwritten by regulated companies, PCP products are not specifically regulated by the Central Bank. These loan agreements are often sold by companies that are not obliged to carry out suitability or affordability checks on consumers. This can mean uncertainty for anyone who encounters a loss in income or change in circumstances.
The Bill would bring these companies within the scope of the consumer protection code and ensure consumers have the same protections as consumers who purchase traditional types of financial products, such as car loans and personal loans. This type of protection benefits the customer as he or she can make better informed decisions about financial products and avoid the unsustainable debt situations that lead to serious arrears and financial difficulty.
The Bill is welcome. I am delighted to be speaking about this today because I believe it has not been addressed for years. I welcome the legislation and I give it my full support.