Munster car dealer insists 'nothing staggering' about PCP debt levels

Mr Murphy said if lawmakers were to be concerned about anything, “it is that consumers are financing very high levels of taxation." File picture: Larry Cummins

Concerns about the cumulative debt of Irish consumers around so-called ‘personal contract plans’ are unfounded because defaults and arrears levels are very low.

That's according to a major motor dealer in Cork, who insisted that PCP contracts have been “reviewed over and over again” and no concerns raised by authorities.

Denis Murphy of Blackwater Motors was speaking after Cork East TD Sean Sherlock revealed the “staggering” amount of debt attached to PCP agreements.

According to finance minister Paschal Donohoe, Central Bank data showed that the outstanding amount of car finance consumer credit advanced to households by Irish banks by way of PCP was €1.17bn on over 62,000 contracts.

Mr Sherlock told the Irish Examiner that he was concerned that there does not appear to be a protocol in place that protects consumers in the event of loss of income that allows for reduced payments.

He called for “clearer communications from the Central Bank about this sector and the impact of such financing for the wider economy”.

However, Mr Murphy said the concerns were unfounded.

“PCP contracts have been reviewed over and over again and nothing’s been found because there is nothing to be found. The reason why they are so popular is that consumers like them and the Competition and Consumer Protection Commission (CCPC) discovered this during their investigation,” he said.

The CCPC said in a report in 2018 that its research showed PCPs have worked well for the vast majority of traders and their customers.

However, it said it was of the view that further protections are required in the PCP market, and called for it to be “within the scope of the Central Bank’s Consumer Protection Code, thus mirroring the protections of other similar financial products”.

Mr Murphy said: “There is no objection from the car sector and the car finance sector to bring all HP contracts including PCP contracts under the Central Bank’s Consumer Protection Code, this is just a formality and will not change anything with the manner in which PCP contracts are sold.

The banks that we deal with for all finance contracts including PCP contracts, suitability and affordability is a cornerstone of the credit application process, if the customer can’t afford it or the contract is not suitable for them, then they don’t pass the first stage in the application process.

“Given we have the second-highest level of car taxation in the EU and therefore the second most expensive cars, the numbers involved are not staggering at all."

He said if lawmakers were to be concerned about anything, “it is that consumers are financing very high levels of taxation and maybe should advocate a reduction in taxes to reduce the amounts financed”.

“That would really benefit consumers,” Mr Murphy said.