Former Permanent TSB (PTSB) chief executive David Guinane said it was “extraordinary” that he was the only individual being subjected to an inquiry relating to the industry-wide tracker mortgage issue, especially when it involves events that took place 15 years ago and where there is a question over how many customers were affected by an alleged regulatory breach.
Mr Guinane said the most upsetting aspect of the investigation was the Central Bank of Ireland listing the case on its website for more than two years in a way that suggested the bank and himself had acted in a way that was “dishonest and unfair” to customers, when it became clear as hearings began last month that the regulator was not claiming that he had acted dishonestly.
“But that doesn’t get away from the fact that that sat there [on the website] and that my family and my friends had to see that,” Mr Guinane said as he began to give evidence on Wednesday.
He said he finds it “extraordinary” that he is being asked to account for events that occurred 15 years ago that he cannot remember.
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“I also find it extraordinary that ... of all the banks in Ireland and all the hundreds of millions of euros that they’ve been fined, that I am the only person who is having to face this type of inquiry,” he said. “I believe I have been singled out and being [made] a scapegoat.”
Mr Guinane, who worked for PTSB for more than 25 years and served as chief executive of the lender between November 2007 and February 2012, said he has at all times co-operated with the Central Bank on the matter, from the time in 2017 when he was first contacted by the regulator in relation to its investigation into PTSB’s role in the tracker issue.
The inquiry, chaired by sole member, UK barrister Peter Hinchliffe, is looking into whether Mr Guinane participated between January 2009 and April 2010 in an alleged regulatory breach when the bank only offered a low, original tracker rate to customers coming off a period of fixed rates after they specifically requested it or complained about it.
By failing to extend the more favourable rates to similar customers who did not complain, PTSB – and, by extension, Mr Guinane – is alleged to have failed in its obligations under a general principle of the Consumer Protection Code 2006 to act in its customers’ best interests.
PTSB stopped offering tracker mortgages, where rates are linked to the main European Central Bank (ECB) rate in July 2008, at a time when banks’ funding costs on internal markets were spiralling at the outset of the financial crisis.
The inquiry centres around a special condition – known as special condition 706 – contained in the paperwork of some PTSB tracker mortgages from when the bank first offered this product in early 2004.
This required customers, that 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 or another fixed product. Otherwise, they would default to a standard variable rate, the inquiry has heard.
The ambiguous wording of the special condition led to questions in early 2009 about whether a customer opting to go back on to a tracker rate after a fixed period was entitled to a loan set at the original margin over the ECB rate, or a higher margin then on offer from PTSB.
The inquiry previously heard that on foot of internal legal advice, the bank’s then head of marketing, Niall O’Grady, sent an email to Mr Guinane on January 16th 2009, proposing only customers who actually contacted the bank requesting the original margin should be offered the more favourable rate, the inquiry heard. Mr Guinane replied to the email three days later with the words, “Ok to that”.
Mr Guinane said on Wednesday he did not recall a discussion about the issue when it came up at an executive committee meeting the previous week under the topic of “any other business” at the end of the gathering. He said his earliest recollection of special condition 706 coming to his attention was in 2017, when asked by regulators.
PTSB went about compensating customers affected by the matter in 2010 at the request of the regulator. The inquiry previously heard that 234 customers were compensated as a result, with the process monitored by professional services firm KPMG.
However, Mr Guinane raised questions about the relevance of that figure in the context of him being investigated for alleged regulatory breaches between January 2009 and April 2010 when a redress scheme involved cases that went back to 2005. The wider period involved all instances where customers were put on a rate with a higher margin than the one agreed at the outset of a loan.
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