A public inquiry into allegations that one-time Permanent TSB (PTSB) chief executive David Guinane participated in a strategy 15 years ago to treat certain tracker mortgages unfairly has not heard evidence that any borrower was affected, a lawyer for the former banker said.
“Without that evidence, there simply can’t be a finding against the bank,” Thomas Hogan SC, for Mr Guinane, said on Thursday as the inquiry began to hear closing arguments. “It cannot be a contravention without such evidence of detrimental consequences having occurred to customers.”
The case centres around a clause in boom-era PTSB tracker loan documents. 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. 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.
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The bank adopted a strategy in January 2009, on foot of legal advice, to only put customers that requested the original rate – or complained – on the more favourable rate.
PTSB went about compensating customers affected by unfair treatment in 2010 at the request of the regulator. It would pay €1.2 million to 234 customers for cases that went back to 2005.
Mr Hogan said on Thursday that the inquiry has been provided with no evidence of any customers being affected between January 2009 and April 2010. This is the specific period in which the former chief executive is alleged to have participated in a breach of a consumer protection code for failing to act in customers’ best interests.
The position of the Central Bank is that Mr Guinane signed off on the strategy when he responded with the words “ok 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.
Ailbhe O’Neill SC, representing the Central Bank’s enforcement team at the inquiry, said Mr Guinane’s interpretation of what was meant by the email has changed over time.
She noted that Mr Guinane told investigators in 2017, when they were looking into the actions of the bank, that he then believed the 2009 decision to only give a favourable tracker rate to certain customers was not fair.
However, Mr Guinane’s position had changed by 2019, when he was personally under investigation, Ms O’Neill said. The former chief executive testified last week that while he does not remember events surrounding the decision 15 years ago, he understood the email to mean – based on having reviewed documents – that “any customer” coming out of the fixed rate would “go back to their original rate”.
“It’s untenable that he didn’t understand or realise what the bank was doing, because he was the CEO, he was responsible,” Ms O’Neill said.
Still, Mr Hogan said the final decision on the strategy was actually taken in early February by others in the bank, who had knowledge of the details of the issue and full internal legal advice that was never shared with Mr Guinane.
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