Thursday 22 February 2018

Fingleton turns on banks over aggressive tactics

'It was different in my day', says former IN chief

CRITICAL: Michael Fingleton
CRITICAL: Michael Fingleton
Ronald Quinlan

Ronald Quinlan

Former Irish Nationwide chief executive Michael Fingleton has criticised banks that pursue people for residual mortgage debt after their homes have been repossessed and sold, and said he is surprised that the practice appears to enjoy the support of the Central Bank and the Government.

While Mr Fingleton's view may raise eyebrows given Irish Nationwide's own aggressive pursuit in the 1980s of those who failed to keep up on their mortgage payments, he is comfortable that there is no contradiction between his position then and now.

He said: "In the 'Eighties, when the market was very bad, people got into difficulty and properties were repossessed. We would always try and get the borrower to sell the property themselves so they could get a better price. If there was a small surplus they [the borrower] would get it. If there was a loss on the property then we would not pursue the borrower for the deficit. If there was no asset then that was the end of it."

Comparing that strategy with the one which predominates today, he added: "Nowadays, I notice all the banks are pursuing borrowers for all the losses and the deficits on the loans even after repossession, and even after no other asset being available. I would question that, but it seems to have been supported by the Central Bank and it seems to be supported by Government. I just don't understand that."

The former building society chief's remarks on home repossessions came in the course of an interview with the Sunday Independent following his recent appearance at the Banking Inquiry.

Asked to explain former Irish Nationwide non-executive chairman Dr Michael Walsh's description of him as the "Michael O'Leary of his day", Mr Fingleton recalled how he had taken on the country's traditionally conservative building societies by minimising bureaucracy, increasing interest rates for depositors and slashing waiting times on approvals for mortgages and other loans.

Recalling how Irish Nationwide had taken lending business from its competitors, he said: "We recognised that we needed to attract more deposits to lend more money. People were required by other institutions to have a deposit of 12 months, or 18 months or two years or whatever to qualify for a loan; so we adopted a commercial attitude to increasing our funding.

"We paid a higher rate to depositors on term accounts and got in more money. We were then in a position to accommodate borrowers who qualified for loans without having a deposit with us for a determined period."

Elsewhere in his evidence to the Banking Inquiry, Dr Walsh - a hugely respected figure in the world of finance and long-standing associate of businessman Dermot Desmond - rejected the suggestion Mr Fingleton had "enjoyed complete autonomy and was free from oversight of the board" of Irish Nationwide.

Asked about this, Mr Fingleton said this "perception" had originated from, and been sustained by his personal involvement in Irish Nationwide's public relations campaigns and its sponsorship of sports.

He said: "We developed a business on sponsorship and PR and developed a great relationship with the media. We got a lot of coverage and that was the origin of me being the face of Irish Nationwide. Ever since then it was Michael Fingleton, not Irish Nationwide that appeared in the newspapers. The perception then grew that it was me that controlled the society, that ran the society and there was no other employee in the society; that I did everything and this became the perception, but it was wasn't the reality."

Equally, Mr Fingleton rejected another widely held perception, that he had been well connected politically and too 'close' to politicians.

On this, he said: "My involvement in political connections related to my attempt from 1995 onwards to get the legislation changed. That was my focus, and in that sense I was lobbying ministers and anybody else for that matter. It was focused on a particular objective. I would have known politicians and all the rest of them but that's about it.

"We were supposed to be financing politicians left right and centre, but I think they did an investigation into that and we had seven that would have included senators and politicians [TDs]. The perception that we were financing all these loans and soft loans to politicians wasn't true."

Last Tuesday, lawyers for the former Irish Nationwide chief launched High Court proceedings aimed at stopping the Central Bank from conducting an inquiry into alleged regulatory breaches at the building society.

Mr Fingleton's barrister, Francis Kieran, said his client was seeking various orders and declarations, believing the holding of the inquiry to be disproportionate, oppressive and unreasonable. Mr Kieran said Mr Fingleton was also the subject of proceedings before the Commercial Court, also arising out of events at the building society before it was nationalised, and that the inquiry, at the very least, should not be conducted until those proceedings had been concluded.

Mr Justice Michael White granted permission for the judicial proceedings aimed at preventing the Central Bank from holding the inquiry to be brought.

Sunday Independent

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