The Irish government is carrying out a review into the country’s PCP market, finance minister Paschal Donohoe has confirmed, mirroring the ongoing scrutiny of car finance by British regulators.
Donohoe’s acknowledgement, first reported by The Times, follows on from an ongoing spat between the Central Bank of Ireland, which regulates financial services providers, and consumer watchdog the Competition and Consumer Protection Commission (CCPC) over which entity should be tasked with PCP oversight.
A Central Bank report published in March found the PCP market in Ireland had grown ninefold to 126,000 contracts over five years, for a total worth of €1.5bn (£1.3bn).
According to the report, PCPs accounted for 43% of total car debt in the country, up from 23% in 2014. The bank expressed concerns over incentives aimed at customer retention, lenders’ exposure and consumer indebtedness.
Also in March, the CCPC published its own findings on PCP, highlighting a risk to consumers should residual values decline, and pointing to a lack of buyer protection.
Both the Central Bank and the CCPC have subsequently said the oversight of PCP should rest with the other. The CCPC called for a review of the Consumer Credit Act 1995 in order to bring PCP within the Central Bank’s remit, while the Central Bank said under current law, responsibility rested with the CCPC.
The stand-off prompted calls from legislators for finance ministry to intervene.
“I think there’s a growing appreciation that the scale and impact that [PCPs] can have on the economy is significant, and it will be important to make sure that we have the right regulatory framework in place to look at how we can look at that,” Donohoe said in April.
“So I’ll be dealing and engaging with both [the Central Bank and the CCPC] to see what is the best response as to how we deal with this.”