THE Central Bank has launched an inquiry into former Permanent TSB chief executive David Guinane, who is suspected of breaking consumer protection rules during the tracker mortgage scandal, the Irish Independent has established.
It is the first formal inquiry into the behaviour of an individual involved in the tracker mortgage scandal.
Mr Guinane, who was chief executive from November 2007 to February 2012, could ultimately face a penalty of up to €1m and other sanctions if the inquiry finds he violated financial regulations.
Permanent TSB was already fined €21m for overcharging its tracker customers after a lengthy and complex investigation by the Central Bank into the entire banking sector found numerous violations of financial regulations.
The Central Bank yesterday said it had “reasonable grounds to suspect that a person formerly concerned in the management of Permanent TSB participated in the commission of a suspected prescribed contravention” of the Consumer Protection Code 2006.
The notice did not name Mr Guinane, who ran the bank during the period the code was in force before being replaced by an updated version in 2012.
An inquiry will now be held to determine whether he contravened the first principle of that code, which is to act “honestly, fairly and professionally in the best interests of customers and the integrity of the market”.
Mr Guinane did not respond to numerous attempts to contact him. Spokespeople for Permanent TSB and the Central Bank declined to comment.
The inquiry represents an escalation of the Central Bank’s normal administrative sanctions procedure, which typically involves a negotiated settlement behind closed doors between regulators and the entity or individual under investigation.
Inquiries are initiated only in the most extraordinary cases. In the last decade inquiries have been opened into Irish Nationwide Building Society, Quinn Insurance and the Irish Bank Resolution Corporation.
UK barrister Peter Hinchliffe has been appointed to conduct the inquiry and will decide how it will proceed, including whether hearings will be held in public and what evidence and findings will be released.
Individuals under inquiry can seek a settlement with the Central Bank which, if accepted, would bring the inquiry to a close.
In May 2019 the Central Bank imposed the then-largest fine ever on an Irish financial institution on Permanent TSB for causing “unacceptable harm” to its tracker mortgage customers.
The debacle caused 12 families to lose their homes.
Permanent TSB had to pay €53m in redress and compensation and put the 2,000 customers back on the attractive tracker rates.
The banking sector collectively has had to pay about €750m in compensation and redress so far.
It is expected Bank of Ireland and AIB will be fined in the coming months.