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Retail Credit Firms
The Minister for Finance has 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 (“CBI”) as “retail credit firms”. The CBI will then be able to apply its Consumer Protection Code (“CPC”) and other consumer protection powers to such firms, with the aim of improving the level of protection available to consumers.
As the announcement states, the Tutty report on the PCP market published in November 2018 outlined a number of recommendations to improve the level of consumer protection in relation to the provision of PCP and hire purchase agreements. The new legislation will give effect to those recommendations. It is currently proposed that this be done by expanding the definition of “retail credit firms” in Part V of the Central Bank Act 1997, which already provides for the authorisation of retail credit firms that provide cash loans. Certain consequential amendments to the Consumer Credit Act 1995 (“CCA”) may also be necessary.
Hire purchase and similar types of credit have long been subject to the requirements of the CCA, but the providers of such credit to consumers have not themselves previously needed to be regulated. This would be a significant change for unregulated firms and their businesses, necessitating the amendment of their products and procedures in line with the CPC.
The proposed legislation might also have various follow-on consequences. One of these is that a credit provider that sells a portfolio of eligible credit agreements may need to take account of the credit servicing regime, which would require the portfolio purchaser to be authorised as a “credit servicing firm”.
The General Scheme for the legislation will now be submitted to the Office of the Parliamentary Counsel to draft a Bill.