Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) 2021: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

The Minister has up to 30 minutes to make his concluding remarks in response to the debate.

We had an extensive discussion on this Bill before the recess, with many Deputies contributing. For technical reasons, we could not complete Second Stage sooner. We had to check a number of issues with the Central Bank before I was in a position to deliver my closing reply. I am now in a position to do so, having clarified a number of matters with the bank during the summer.

I thank Deputies for contributing to this debate and for their support for the Bill. It is generally accepted that there is a need to improve the regulatory framework governing the provision of personal contract purchase, PCP, finance to consumers and the provisions in this Bill are designed to ensure that the Central Bank of Ireland consumer protection code and any other relevant Central Bank code or regulation can be applied to all the entities that provide credit, hire purchase and PCP agreements to consumers, and to entities that service such agreements. As Deputies will be aware, PCP financing has become common and popular in the motor industry in recent years but it was not governed by legislation, which is one of the key aspects of the Bill.

There are a few points I wish to make in light of the contributions from Members. Deputy Martin Kenny raised the issue of the collection and publication of information and data on credit, hire purchase and PCP agreements. This is an important point and it is desirable and even necessary to have more data on such agreements. The Central Bank also agrees with this and it is committed to increasing the volume of data on the amount of credit and other types of financial accommodation provided or serviced by banks, retail credit firms and credit servicing firms. I would also like to confirm that section 9 will allow the Minister to ask the Central Bank to collect and publish relevant statistics not only on a once-off basis but, if deemed appropriate, also on an ongoing basis. The bank will continue collecting information about consumer hire purchase agreements and consumer PCPs that relate to cars, and will publish it in the coming months. This information will be published at regular intervals and will contain data on the size of the market in terms of the value and number of agreements and contracts in issuance. The Central Bank continues to review the data on the amount of credit and other types of financial accommodation provided or serviced by banks, retail credit firms and credit servicing firms that it may need to collect and publish.

Deputy Nash noted some of the characteristics of PCP and hire purchase agreements and the particular issues consumers need to be aware of when entering such agreements. These are important points and by bringing the providers of these agreements within the regulatory scope of the Central Bank, the bank will, through its ability and flexibility to amend its consumer codes and other regulatory measures, be best placed to more quickly amend its codes and regulations in order that the framework of consumer protection can be updated, as necessary, in line with the evolution of the consumer credit market.

Deputies Patricia Ryan and Ó Murchú noted that this Bill will not address moneylenders and the rate of interest that can be charged on moneylending agreements. While I appreciate their views and concerns in this regard, the Bill is not intended to address the important issue of the regulation of moneylenders. However, they may wish to note that the matter is being addressed in a separate Bill. The general scheme of a consumer credit (amendment) Bill has been prepared and has sent to the relevant Oireachtas joint committee for pre-legislative scrutiny. I look forward to engaging with the committee and the House on that scheme and Bill in due course.

They are connected issues in everybody's mind but we are dealing with it with two separate Bills.

Deputy Shortall emphasised the importance of regulating the providers of indirect credit, not least because of the growing popularity of this form of credit and the fact that it could entice some consumers to overborrow. This point is well made and the Bill will regulate not only those firms that provide credit in the form of cash loans, but all the providers who engage in the business of providing credit more generally to consumers. Put simply, some people can borrow money and have an agreement through a credit card or finance arrangement to pay it back. However, if someone goes into a furniture shop and the shop arranges the credit, the arrangement is between the consumer and the company providing the credit, that is, the credit is being provided in an indirect manner. Some of these were not caught on the regulations. Many people buy a lot of household products through such arrangements and there is no direct link with the people from whom they are getting the finance at the point of purchase. The shop is an intermediary. We want to ensure these indirect agreements are also covered by this.

Deputies Murnane O'Connor and Devlin emphasised the consumer protection rationale for this Bill and the need to implement it as soon as possible. Others, such as Deputies Verona Murphy and Shanahan, welcomed the formal interest limit on credit and hire purchase agreements. While we do not wish to interfere in a normal working market and control interest rates, there is a consumer protection rationale to provide for interest rate ceilings that will prevent extreme pricing but will leave the core market to operate with minimal implications. Indeed, as highlighted by Deputy Martin Kenny, the European Commission has now brought forward a proposal for a new directive on consumer credits, which provides that caps on interest rates for consumers should be introduced. This Bill anticipates and provides for this proposed development.

Deputies Michael Collins, O'Donoghue and Niamh Smyth drew attention to the importance of credit unions and the unique contribution they can make to servicing the credit and banking needs of local communities and small businesses. While not strictly germane to the objective of this Bill, as credit unions already fall within the regulatory remit of the Central Bank, nevertheless the points made by the Deputies about the importance of credit unions are correct and well made. I also have responsibility for credit unions and have had extensive meetings with many of those involved in the credit union movement in recent months. There have been dozens of meetings. In due course, I will bring forward some proposals for discussion among everybody who has an interest in the credit union movement. I expect there may be some legislative amendments and improvements.

As Deputies will be aware from my opening contribution on Second Stage, the Minister for Finance consulted the European Central Bank, ECB, on this Bill, as is normal process. This consultation process is required on legislative proposals that will impact on the ECB's or a national central bank's field of competence, such as, in this case, where it is proposed to extend the regulatory remit of the Central Bank of Ireland to all the providers of credit, hire purchase and PCP agreements to consumers and to entities which service such agreements.

In its response the ECB noted that the Bill only involves a marginal addition to the existing tasks of the Central Bank and, accordingly, it has decided that it is not necessary to adopt a formal opinion on the Bill. The Government notes this position and appreciates the ECB's consideration of the Bill and welcomes the fact that it has no objection to it. That is one reason we held over the Second Stage reply as we waited for that confirmation during the summer.

The Government intends to seek two amendments to this Bill as it progresses through the legislative process, which are currently being developed by officials. The first is to make a technical amendment to section 2. The implementation of the recently amended EU securitisation regulation 2021/557, which arises from the EU capital markets recovery package and is designed to help banks meet credit demand and allow a broader range of investors to fund the economic recovery from Covid-19, will make limited amendments to section 28 of the Central Bank Act 1997, including in section 28(2A). Accordingly, we will need to amend the provisions in this Bill that correspond to that subsection so that they will align with the new section 28 provisions on securitisation. The second amendment is to include the Central Bank of Ireland, in connection with the operation of the central credit register, under Schedule 5 of the Social Welfare Consolidation Act 2005 and so help facilitate the more accurate processing of data on the central credit register. The Office of the Attorney General will advise on these amendments. PPS numbers would be maintained through the Department of Social Protection, through the Social Welfare Consolidation Act. To allow a link with the Central Bank on that information, it is necessary to make this provision in exchange of data. We specifically want to deal with that because people ask who gets their information when it goes to the Department of Social Protection. The Department has agreements with several State agencies but not with the Central Bank in this regard. That is why we had to introduce legislation on this to make it crystal clear what we are doing.

To conclude, I thank Deputies for their contributions and clear support for the objective of the Bill. I would also like to thank Mr. Michael Tutty for his work and his report on PCPs, which provided the impetus for the Bill. With the co-operation of those on all sides of the House, I believe we can get this legislation through the Houses as quickly as possible and to improve consumer protection in respect of credit and other forms of financial accommodation.

Question put and agreed to.