On 17 July 2017, Ireland's Competition and Consumer Protection Commission ("CCPC") announced that it has launched a study into the Personal Contract Plan ("PCP") in the motor sector.
A PCP is a form of hire purchase used in the motor sector. It has become very popular across the Irish motor sector and is now regarded by many as the primary method of finance offered by dealers.
The CCPC said that its study:
- will examine the experiences of consumers in the market;
- assess the information provided to consumers at the point-of-sale;
- analyse consumers’ understanding of PCPs (including the structure of the product and the options available to them at the end of the agreement).
Ultimately, the CCPC has said that the findings of the study will determine the suitability of the current consumer protection regime and help inform any future policy decisions. It may well be that the CCPC will issue recommendations on changes which it would hope that the industry will follow but also recommend changes to the Minister for Jobs, Enterprise and Innovation to adopt or propose to Parliament.
The CCPC says that it is aware of issues that some consumers have experienced in relation to PCPs. It has identified those issues as concerning a lack of awareness of certain terms and conditions, uncertainty as to what certain terms and conditions mean at the end of their agreement and questions around the regulatory status of both the credit intermediary selling the product and the lender, with whom the consumer enters into the agreement.
Isolde Goggin, the CCPC Chairperson said, “After a mortgage, the purchase of a car is likely to be the biggest financial commitment a consumer will make. From our interactions with consumers we know that PCP is an increasingly popular way for consumers to finance the purchase of a car. However, these products are relatively new and considering their complexity there is potential for consumer misunderstanding and detriment if they take out a product that may not be suitable for them. The information gained through this study will guide our future work and form an evidence base that can be used by policy-makers to assess the suitability, or otherwise, of the current consumer protection regime. In addition to an extensive analysis of the market and engagement with the industry, this study will focus heavily on the consumer experience so it is important that consumers have their say. We would like to hear from those who have a PCP agreement, particularly anyone who either experienced problems in understanding the product before buying or had difficulties after they signed up to the contract. You can contact us through our website ccpc.ie.”
Vincent Power of A&L Goodbody said: "Having worked on several studies and investigations over the years, I would advise those interested in this study to engage fully with the CCPC, consider any questionnaire very carefully, take appropriate legal and economic advice but also to anticipate some of the likely changes or recommendations so as to stay ahead of the curve and avoid any criticism when the report is published."
Alan McCarthy of A&L Goodbody commented: "This is another welcome initiative of the CCPC. It has, in the past year commenced and completed a study on mortgages as well as commenced an in-depth investigation in the motor insurance sector. It is also a very important study in terms of the CCPC's stepping up of its consumer protection remit and jurisdiction. The outcome will be watched carefully by consumers, banks, car dealers and motor manufacturers/distributors."
Anna Marie Curran of A&L Goodbody observed: "I anticipate that the CCPC will issue recommendations on changes which it would hope that the industry will follow voluntarily but also recommend changes to the Minister for Jobs, Enterprise and Innovation for her to adopt by way of ministerial order or to propose primary legislation to Parliament."