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The significant growth of the Personal Contract Plan (PCP) market in recent years led both the Competition and Consumer Protection Commission (CCPC) and the Central Bank of Ireland to conduct studies of the market, which were published in March of this year. Both of these reports identified a number of issues in relation to the PCP market that have potential financial stability and consumer protection implications.

In light of this, in June of this year the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe, commissioned Mr Michael G Tutty to conduct a review of the current Personal Contract Plan market and in particular, to consider the adequacy of existing consumer protection in relation to PCPs.

Mr Tutty has now completed his review and submitted his report, which is being published today on the Department of Finance website. The Minister of State at the Department of Finance, Michael D’Arcy, on behalf of the Government, took the opportunity to thank Mr Tutty for carrying out this important work.

Speaking upon publication of the Report, Minister D’Arcy said:

In overall terms, the Tutty report has found that there is currently no evidence of consumer detriment arising from PCPs. Nevertheless, it also found that there is a risk that certain potential problems could arise at a future point and that it would be prudent at this point to address these matters before they materialise.

The report therefore sets out a number of recommendations to tackle these potential future problems and to improve consumer protection in relation to PCPs without imposing an undue burden on providers or regulators.

One of the key recommendations of the report is that relevant provisions of the Central Bank Consumer Protection Code, in particular the provisions which require lenders to assess the suitability of the product for the consumer and also the ability of the borrower to repay the debt over the duration of the credit agreement, should be extended to hire-purchase/PCP agreements.

The Tutty report also recommends that legal advice should be obtained to confirm whether or not PCPs fall within the Consumer Credit Act 1995 definition of "hire-purchase agreement", and, if not, that a review of that Act should be carried out with a view to enshrining PCPs in consumer protection legislation either as part of the hire-purchase provisions or on a separate basis.

Minister D'Arcy has welcomed these recommendations and stated that:

The conclusions in the Tutty report are worthy of adoption and will improve the level of consumer protection in relation to PCPs without imposing an undue burden on providers or regulators. Therefore, having published the report, it is now the Government’s intention to liaise closely with the Central Bank, the Attorney General’s Office, the CCPC, and other relevant bodies with a view to implementing the report’s conclusions.

The report is today (1 November) published on the Department of Finance website can be found here.

Note for editors:

Mr Michael G Tutty is a former Second Secretary General of the Department of Finance and also former Chairman of the Commission for Energy Regulation. He is currently a member of the Irish Fiscal Advisory Council.