David Guinane, the past CEO of Permanent TSB (PTSB), expressed bewilderment at being the sole individual under investigation for the extensive tracker mortgage issue. Mr Guinane finds the focus on a possible regulatory violation that allegedly occurred 15 years ago, astounding given the unclear number of clients affected.
He was distressed by the Central Bank of Ireland’s continued display of the case on its website for over two years, implying he and the bank acted dishonestly and unfairly towards their customers. According to Mr Guinane, the regulator, however, made no aforementioned charges as hearings commenced last month.
“What had been stated on the website was something my loved ones had to confront,” Mr Guinane said, whilst testifying on Wednesday. In his view, having to recall events from 15 years ago that he doesn’t remember is peculiar.
He went on to state, “It’s baffling to me that, despite the hundreds of millions of euros in penalties imposed on all Irish banks, I am the only individual subjected to this sort of investigation. I believe I am being overly criticised.”
Mr Guinane, who has worked for PTSB for over 25 years and served as its CEO from November 2007 till February 2012, mentioned he had always worked closely with the Central Bank in relation to this matter since initially being contacted by the regulator regarding its investigation into PTSB’s involvement in the tracker issue in 2017.
The sole member of the inquiry board, UK barrister Peter Hinchliffe, is looking into the allegations of a regulatory breach involving Mr Guinane from January 2009 to April 2010, where the bank offered a low original tracker rate to customers after a fixed period only when it was specifically voiced or complained about.
PTSB and Mr Guinane are reportedly alleged to have ignored their responsibilities stipulated by the Consumer Protection Code 2006’s basic principle to act in the best interest of the customers, primarily due to their failure in offering better rates to similar customers who haven’t lodged a complaint. PTSB ceased the provision of tracker mortgages, which have their rates tied to the significant European Central Bank (ECB) rate, in July 2008 as the financial crunch began, causing banks’ funding costs in internal markets to sharply increase.
The investigation primarily fixates on a unique condition named special condition 706, which was included in the documents for some PTSB tracker mortgages provided first in early 2004. Customers who shifted to a fixed rate for some time were required by this condition to notify the bank to revert them to a tracker rate or another fixed product at the end of this rate. If they failed to do so, they would default to a standard variable rate, as per the investigation’s findings.
The unclear language of the special condition brought about queries in early 2009 concerning a customer’s entitlement to a loan set at the original margin over the ECB rate or a higher margin available from PTSB when choosing to return to a tracker rate after a fixed timeframe. Internal legal guidance led to the bank’s marketing head at the time, Niall O’Grady, proposing in an email to Mr Guinane on January 16th, 2009, that the better rate should only be offered to the customers that actively communicated with the bank to request the original margin, Mr Guinane responded and accepted three days later.
Mr. Guinane admitted that he doesn’t remember a discussion concerning this issue at an executive committee meeting last week under the topic of “any other business”. He disclosed the first time he became aware of special condition 706 was in 2017 when the regulators contacted him. To remedy the situation, the regulators asked PTSB to compensate the affected customers in 2010. As a result, 234 customers were compensated with the process overseen by KPMG, a professional services company, as reported in an earlier inquiry.
Mr Guinane, nevertheless, questioned the significance of that statistic in relation to the inquiry into his supposed violations of rules occurring between January 2009 and April 2010. Interestingly, a compensation programme included instances dating back to 2005. The time frame in consideration included all scenarios where borrowers were subjected to a rate larger than what was originally agreed upon during the initiation of a loan.
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