Central Bank must take over regulation of PCPs to stop 'wilder' players taking advantage - Pearse Doherty TD
Sinn Féin spokesperson for Finance, Pearse Doherty TD, has said FOI documents he has received point to the fact that regulation of Personal Contract Loans in car finance must be taken over by the Central Bank.
He said the lack of enforcement powers means the Competition and Consumer Protection Commission cannot adequately manage the issue.
Deputy Doherty said:
"I have major concerns regarding car financing activities in the State because of the possibility of sub-prime lending and possible misselling of loans to consumers. Now we have the evidence that points to very real concerns that this could be a massive scandal if action is not taken.
"Personal Contract Loans (PCPs) are not regulated as a financial product by the Central Bank, meaning the checks and balances that apply when buying insurance or a personal loan from your bank don’t apply in the case of PCPs.
"This issue relates to the ambiguous position of Hire Purchase agreements in law and regulation something I have raised several times with the Minister for Finance.
"Buyers could sign up for a car loan without fully understanding the loan conditions or without a comprehensive financial check to assess if they can afford it. No other product as expensive or as important as this could be sold on that basis.
"The Department of Finance is acutely aware that the Competition and Consumer Protection Commission has little enforcement powers under the Consumer Credit Act, according to a Freedom of Information request released to me.
"The FOI states in black and white that due to the lack of enforcement powers there is a 'risk of things going wrong in the future, possibly through a drop in future values'.
"Furthermore, as noted in the FOI there is real risk to consumers and the State if the 'wilder' ends of the motor trade get involved in PCPs.
"I believe only the Central Bank, with the legislative support if required, can step in and regulate this sector. We now know the warnings, let’s act."