A former chief executive of Permanent TSB has criticised aspects of a Central Bank investigation into his alleged involvement in a suspected regulatory breach by the bank involving some of its tracker mortgage customers.
David Guinane also described it as "extraordinary" that he is the only person from either PTSB or any other bank having to face this type of an inquiry and that he is having to account for something that happened 15 years ago that he and other participants can't remember.
He also reiterated his belief that he has been "singled out" and is being made a "scapegoat".
Mr Guinane was giving evidence for the first time at the Central Bank inquiry into whether he, while CEO of the bank in 2009, participated in a suspected breach by PTSB of the Consumer Protection Code.
It is alleged that PTSB applied an interest rate for tracker mortgage customers coming off a temporary fixed rate that was less favourable, unless the customer raised specific queries about the rate they were to be charged.
The Central Bank suspects that PTSB treated those customers who did not complain about the tracker rate unfairly and contrary to their best interests when compared to those that actually complained.
Speaking from the witness box, Mr Guinane told the inquiry that he had never been the subject of a complaint or adverse finding, prior to the start of the Central Bank investigation into his alleged actions.
He said that at all times, from when he was first contacted by the Central Bank to help it with its initial investigation into PTSB, he has cooperated.
"That's the way it should be," he said.
But Mr Guinane said he has been upset by some of the regulator's conduct during the period.
He said that when he first met the Central Bank to discuss its investigation into PTSB, he was told nothing.
But then on New Year’s Eve of 2017 a registered letter, which he suggested would usually have to be signed for, was "stuffed" into a post box outside of his home.
Mr Guinane said his solicitor wrote a letter to the Central Bank asking for an explanation as to why the registered letter was sent on New Year’s Eve and was not signed for.
He said the Central Bank sent back a receipt, which he described as having a "laughable" squiggle.
Mr Guinane said a few years later his solicitor was rung and told the fact he was to be charged with the alleged contravention would be on the regulator’s website the following morning.
But he said that within an hour of that phone call, two journalists had contacted him looking for comment, which he refused.
He added that later that evening a journalist called to his house, which he said was very upsetting for his wife and his family.
That leak, Mr Guinane told the inquiry, "did not come from us".
He said he followed up with another letter to the Governor of the Central Bank, but was told there would be no investigation as the regulator knew it "didn’t leak".
Mr Guinane said perhaps most upsetting was that when the details of the inquiry did go on the Central Bank’s website, the description of the contravention used the words "dishonest" and "unfair".
Dishonest is a very powerful word, he claimed, adding that it remained online for up to three years, until the senior counsel for the legal practitioner team to the inquiry in his opening remarks stated that dishonesty was no longer part of the charge.
"That doesn’t get away from the fact that that sat there and that my family and my friends had to see that," he said.
Later, senior counsel John Breslin for the legal practitioner team to the inquiry, clarified that in his opening remarks he had said dishonesty is not suspected or alleged.
Mr Guinane also said he finds the whole affair extraordinary, as he is the only person from either PTSB or any bank, having to face this type of an inquiry.
"I believe I have been singled out and I am being a scapegoat," he added.
David Guinane told the inquiry that prior to giving an interview in 2017 to the Central Bank’s probe of the bank’s handling of tracker customers, he had not had any interaction with it about the issue.
He said that when he was interviewed in 2017 by the Central Bank, it was not suggested to him that he had participated in an alleged regulatory contravention by PTSB.
He said that he did not become aware that he himself was the subject of an investigation by the regulator until he gave a second interview to it in 2019.
He was subsequently given notice of the inquiry two years later, in November 2021, the inquiry heard.
The former CEO described to the inquiry the atmosphere at the bank between 2008 and 2012, when the financial crisis was unfolding,
He said that prior to the collapse of US lender Lehman Brothers in 2008, there had been hope that the bad news in the banking sector would be temporary.
He told the inquiry that in 2008 PTSB had already commenced seriously reducing the size of the bank through redundancy schemes, as it didn’t have the funding available for new lending.
He added that in 2009 the organisation also had the situation where the Irish Life and Permanent group CEO and CFO at the time were "effectively sacked" due to their involvement in a transaction with Anglo Irish Bank.
This, Mr Guinane said, caused not only them a lot of pain, but also the Irish Life and Permanent organisation as staff didn’t understand what was happening and the bank was looking for redundancies.
Mr Guinane said he wouldn’t describe the times as chaotic, but said it was a very different environment to what people had known and had been used to.
Although he also said that even "in the good times", there was a lot of pressure.
Mr Guinane told the inquiry that while the executive committee of PTSB took decisions affecting the day to day running of the bank, he said it didn’t have executive authority as that lay with the board of the bank’s parent group, Irish Life and Permanent.
He said he wasn’t made aware of a query being raised by a broker around the tracker issue prior to it coming to a meeting of the executive committee on January 13th 2009, as an "Any Other Business" item on the agenda.
He also told the inquiry that he hadn’t been aware prior to that meeting that the issue had been considered by a team of "subject experts" from the compliance, legal and marketing departments in the bank.
Under questioning from his own senior counsel, Thomas Hogan, Mr Guinane said the "Any Other Business" section of the agenda could include anything, but in reality generally contained items considered less important than items on the main agenda.
Mr Guinane told the inquiry he has no recollection of attending the meeting, of the agenda items of the meeting, of discussing the matter at the meeting or of raising a series of questions about the issue at the gathering.
He also explained that he had no prior knowledge of a special condition, known as 706, which was contained in the mortgage documents of thousands of tracker mortgage customers that entitled them to move to a fixed rate for a period and then return to a tracker rate.
Mr Guinane said that following the executive committee meeting of Tuesday January 13th 2009, he can’t recall having any further discussions with then head of marketing, Niall O’Grady, about the issue, or being party to conversations with anyone else considering the issue.
The inquiry then spent a subsequent period in private session discussing privileged legal advice provided by the bank to its own staff at the time in relation to the tracker issue.
However, the inquiry later heard that on Friday January 16th 2009, head of marketing Niall O'Grady sent an email to Mr Guinane containing a proposal to deal with the tracker issue.
Mr Guinane subsequently responded on Monday January 19th 2009 with the words, "Ok with that," three minutes after he had received a "chaser" email from Mr O’Grady, following up on the issue.
Asked whether it occurred to him that Mr O’Grady’s proposal would set a precedent for all affected customers, Mr Guinane said he had no memory.
He acknowledged that he could have told Mr O’Grady that he required more time to consider the matter, but believed at that time that the proposal was fair and reasonable.
He added that he didn’t see anything in the evidence to suggest there was an urgency to make a decision or that he felt under pressure to.
Under questioning from Mr Breslin, Mr Guinane also denied that the bank’s treatment of a group of tracker mortgage customers was adopted in order to save the bank money at a time when it was under financial pressure.
Mr Guinane said it was fair to suggest that at the time in 2009 when the decision was taken about how the cohort of tracker mortgage customers should be treated, he didn't think the issue was important.
"If only I knew, but I didn’t believe this decision would turn out to be as important as it has become and the reason we are here," the banker told the inquiry.
However, he also added that if his sign off and the recommendation had been followed by the bank as it was intended, which he claimed it wasn’t, "we wouldn’t be here."
