A lawyer for the Central Bank of Ireland denied on Friday that its tracker mortgage enforcement investigation into former Permanent TSB (PTSB) chief executive David Guinane had prejudged that he had breached regulatory rules.
Ailbhe O’Neill SC, representing the Central Bank’s enforcement team in the public inquiry on the matter, was responding to claims made by Thomas Hogan SC, counsel for Mr Guinane, that investigators had already decided the former banker had participated in an alleged contravention before putting him forward for inquiry.
She highlighted in closing arguments at the end of three weeks of hearings that Louise Gallagher, head of enforcement investigations at the Central Bank, had previously told the inquiry that it would be up to Peter Hinchliffe, the UK barrister chairing the inquiry, to decide whether Mr Guinane had participated in alleged wrongdoing by the bank in treating certain customers unfairly.
Earlier on Friday, Mr Hogan claimed that submissions from Central Bank enforcement to the inquiry “smack of complete desperation on behalf of enforcement to get a finding at any cost”.
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He said what was supposed to be an inquisitorial inquiry had “pivoted into an accusatory process”.
The case centres around a clause in boom-era PTSB tracker loan documents. This required customers who moved for a period to a fixed rate to instruct the bank as they came off this rate to put them back on a tracker rate. Otherwise, they would default to a standard variable rate.
The ambiguous wording of the clause raised questions in early 2009 about whether a customer looking to return to a tracker rate was entitled to the original margin over the European Central Bank rate, or a higher margin offered by the bank.
The bank adopted a strategy in January 2009, on foot of legal advice, to only put customers who requested the original rate – or complained – on the more favourable rate.
The Central Bank position is that Mr Guinane signed off on the strategy when he responded with the words “okay to that” on January 19th, 2009 to an email from a colleague, which proposed only customers who contacted the bank would be allowed to revert to their original rate. This breached the Consumer Protection Code 2006, which requires financial firms to act in the best interests of customers, it is claimed.
Mr Hogan said the key email did not – contrary to what the Central Bank has suggested – give a full outline of the strategy that was ultimately adopted by others in the bank.
“It simply can’t be said that he played a key and decisive role [in the alleged breach] when he didn’t have the information. It wasn’t communicated to him the very proposal that was intended to [be] implemented by the bank,” he said.
Mr Hogan argued on Thursday that delays in the investigation had also prejudiced his client. It wasn’t until 2018 that Mr Guinane was told that he was the subject of an enforcement investigation – some nine years after the event.
However, Ms O’Neill rejected this, saying there is no statute of limitations on investigations. “There is no constitutional right to a speedy investigation,” she said. “To the extent that authorities in Ireland look at delays, it is post-charge delays that is the focus.” Mr Guinane was served with a notice of inquiry in November 2021, she said.
Mr Hinchcliffe said that he expects to issue his findings “in a matter of months”.
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