Irish tracker mortgage inquiry highlights focus on individual accountability

Orla Hubbard, financial regulation and investigations specialist at Pinsent Masons, said: “The total sanctions imposed on Irish banks relating to tracker mortgages have been unprecedented, totalling €272 million. This is the only inquiry to date into an individual for their participation in those regulatory breaches. While the Central Bank has not yet confirmed whether it will be pursuing individuals from other Irish banks, it is possible that this case may lead by example.”

The Central Bank inquiry has not yet concluded. However at a public inquiry meeting on 29 January, the inquiry member summarised his written findings which had been delivered privately to the parties on 8 November 2024. The written findings concluded that David Guinane, the former CEO of Permanent TSB (PTSB), participated in regulatory breaches concerning the treatment of tracker mortgage customers between 2009 and 2010. The inquiry found that Guinane failed to act in the best interests of customers who intended to return to tracker-rate loans, as required by the Consumer Protection Code 2006 (CPC).

The inquiry found that PTSB “adopted a process that avoided offering the original tracker rate to which certain customers were entitled, unless the customer queried or complained about the rate they were offered”. By not extending the favourable rates to similar customers who did not complain, PTSB was found to have failed in its obligations under the CPC to act in its customers’ best interests.

The key finding against Guinane is that he replied “okay to that” to an email outlining a strategy that only customers who contacted the bank would be allowed to revert to their original rate.

There was no finding of dishonesty against Guinane, and the inquiry member also found that the former CEO did not hold an intention to harm or take advantage of customers. In addition, the inquiry member found that Guinane “was entitled to receive better support” from the wider Irish Life & Permanent Group in relation to its management of tracker mortgages.

Both Guinane and the Central Bank enforcement team were invited to make submissions in relation to the appropriate sanction to be imposed in the case. The final decision has not yet been delivered but potential sanctions for the period in question include a fine of up to €500,000 and a ban from acting in a management role at a regulated financial services firm in the future. Guinane has stated that the decision is “fundamentally flawed”, and he intends to appeal the final decision to the Irish Financial Services Appeals Tribunal.

Lisa Carty, financial services disputes expert at Pinsent Masons, said: “This inquiry is based on the previous regulatory framework which required the Central Bank to establish a participation link between the individual’s conduct and a breach of financial services law by a regulated firm. Going forward, the conduct of individuals will be subject to the new senior executive accountability regime which will enable the Central Bank to pursue individuals directly for breaches of their responsibilities. It is possible that we will see inquiries occurring more often under the new regulatory regime.”