Seanad debates

Thursday, 24 March 2022

Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021: Second Stage


10:30 am

Photo of Marie SherlockMarie Sherlock (Labour) | Oireachtas source

I thank the Minister of State for coming to the Chamber today for this debate. The Labour Party very much welcomes the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill. I wish to begin by paying tribute to the work of Mr. Michael Tutty, the former official in the Department of Finance who put together the aforementioned report. The report was published in 2018 and while we have had two years of a pandemic, this legislation is long overdue.

I am conscious that we are debating this Bill on a day when a new bank has been launched in Ireland, with Revolut announcing that it is officially establishing a presence in the Irish market. Over the last five years in particular, the multiplicity of financial products and actors in this country has grown enormously. Never has it been more important for us to ensure that credit products, and PCPs in particular, are regulated. PCPs have become an enormous feature of the car finance market in Ireland. I understand that they now account for around one quarter, or 40% of the value, of the car finance market. Senator Gavan and others have spoken about the increase in the number of PCPs from 10,000 in 2014 to 62,000 in February 2020, while the volume of credit involved has grown from €174 million in 2014 to €1.7 billion in 2020. The scale of PCPs out there is significant. One of the things that has frightened me in recent years is that PCPs are seen as a way to get a new car every few years but there is a very significant issue around people really understanding what they are signing up to. A particular bugbear of mine is the issue of financial literacy. Sometimes policies that may seem like the best thing since the sliced pan are, when one looks at the fine print, very different and PCPs are a classic example in that regard. The CCPC has described PCPs as being among the least flexible forms of finance. Others have spoken today about the difficulties faced by those with PCPs when they need to sell a car. Of course, we are all only too aware of the difficult financial circumstances that many households now find themselves in. Many households faced difficulties during the pandemic because family members lost their jobs and some still do not have jobs and they are now facing very significant increases in the cost of living. In that context, regulation of PCPs is absolutely vital.

Reference has been made to the balloon payment at the end of PCPs and many people are not aware of the extent of the final payment in order to take a car into full ownership. We have been made aware of situations where PCP contracts contained a provision for a certain level of mileage every year and if that is exceeded, there is a very real difficulty at the end of the contract in terms of handing over. The fine detail of PCPs has proved enormously challenging to many householders.

It is great that we have this Bill before us. It is very positive that APR has been capped at 23%, even though that is still extraordinarily high. A Sinn Féin Bill is going through the Dáil at the moment which aims to limit the APR charged on all forms of finance.

My last point relates to data collection. Time and again I have said that unless we understand a problem we cannot fix it. I am quite conscious that even the data we are relaying today are only a partial reflection of what we understand about the PCP market. In the context of section 9 of the Bill, there is a real issue with regard to the frequency of data collection and precisely what data will be collected. There is an onus on the Department and the Minister to provide more detail within the legislation. We need to hardwire into the Bill what precisely is going to be collated in the future.This is to ensure we have a good grasp of this and any other financial products so we can react accordingly, as regulators and legislators, if that need is required.


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