Bank failed to disclose phonecall recording

IRISH Life and Permanent’s Trustee Savings Bank (PTSB) failed to act in good faith by concealing the existence of a taped telephone conversation with a customer, a High Court judge said yesterday.

Mr Justice John MacMenamin said that PTSB’s failure to provide a transcript of the tape, or at least disclose its existence, led to a fundamental flaw in the decision-making process of the Financial Services Ombudsman in rejecting an appeal by Thomas and Claire Ryan against the interest on a €1 million-plus mortgage tied to their Wexford home and a property in Dublin.

Judge MacMenamin said the Ombudsman’s decision, that the Ryans had failed to prove their complaint against the bank, was impaired for two reasons: The bank’s failure to disclose the tape recording and an error in the Ombudsman’s request to the bank for discovery of documents.

He said the Ombudsman had asked the bank for documents “which the bank considers relevant” to his inquiry into the complaint by the Ryans about the switch in December 2009 from tracker mortgage fixed interest rates to higher variable mortgage rates.

Judge MacMenamin said the phraseology of the discovery request had cast the bank in the role of decision-maker as to the relevance of available documented evidence. This was an error as that function was vested by law in the Ombudsman, not the bank.

He said the central questions in the case related to the power of the Ombudsman to order disclosure of relevant documentary material and the duties of financial service providers to provide such relevant documentation.

In January 2009 Mr Ryan, after hearing media commentary on the matter, had contacted the bank’s Open 24 customer information line to inquire if he and his wife could “break out” of fixed-rate terms their tracker mortgage would revert to in December of that year.

It had been this conversation with a customer information official that had been secretly taped by the bank.

The Ryans’ solicitors had challenged the Ombudsman’s decision in the High Court on the basis that the recording, discovered only after the Ombudsman’s decision against them but prior to the appeal, might put a different complexion on the discussion between Mr Ryan and the bank.

Judge MacMenamin said that what transpired between Mr Ryan and the bank was relevant information, material to the decision-making process on which the Ombudsman had embarked. The bank had failed to disclose even the existence of the recording.

He found it impossible to identify any cogent reason why the bank thought the transcript of the tape was not relevant.

The judge decided that the new evidence, which might or might not alter the Ombudsman’s view, should be presented to the Ombudsman for his reconsideration.