14 August 2025
On 29 July 2025, the High Court confirmed the sanction imposed by the Central Bank of Ireland (‘CBI’) against John Stanley Purcell, the former finance director of Irish Nationwide Building Society (INBS).
The CBI had recommended a fine of €130,000 and disqualification from the management of a regulated financial-services firm for four years. The wider inquiry found that INBS failed to comply with their own policies and procedures in relation to commercial lending and credit risk, however the focus of this article is on the sanction against Mr Purcell.
Following the financial crash, the CBI commenced an inquiry into INBS which has now come to an end after 15 years of investigation and €24.3 million spent. Five senior members of INBS were initially subject to the inquiry, three of whom reached settlements with the CBI between 2018 and 2021, and one, the former managing director of INBS, having their inquiry stayed due to ill health. That left Mr Purcell whose inquiry was concluded on 21 May 2025 with the CBI applying to the High Court to have that decision confirmed.
The 15-year inquiry found numerous regulatory breaches by INBS and Mr Purcell was found to have participated in, or had knowledge of several of these which are outlined below.
Although not directly involved in the day-to-day commercial lending, he did participate as a member of the board. Through that responsibility, he was aware that in some cases the required information from borrowers which would facilitate an assessment of their repayment capacity was not obtained.
It was found that during the period investigated, there were regular failures to ensure that commercial loans were approved in accordance with the internal policies of INBS. Some of these funds were advanced without Board approval and were not in compliance with urgent credit decision approval procedures. Although, the primary responsibility for lending money did not rest with Mr Purcell, the inquiry found that it came under the purview of his obligations as a Board member.
The CBI also found that there were continuous failures to obtain sufficient security for commercial loans or to obtain valuation reports for assets to be used as security before certain loans were advanced. Compliance with maximum Loan to Value limits was also a significant issue. By virtue of attending the Board meetings in which these loans were approved, Mr Purcell was considered to have participated in these failures.
It was also found that INBS did not comply with their own internal policies by failing to review significant arrears of certain commercial loans. On 20 November 2006, a letter from the CBI notified Mr Purcell that the Credit Committee was failing in their role, however Mr Purcell and the rest of the Board failed to address the issue, which was later noted by the CBI.
During the period 21 December 2005 - 30 September 2008, certain reports pertaining to commercial lending and credit risk management were not provided to the Board. Mr Purcell was engaged in regular correspondence with the CBI on behalf of the Board of INBS. Several broken commitments were discovered in relation to the preparation of stress test reports, showing the breakdown in reporting and monitoring.
Finally, the CBI inquiry found that the INBS Board failed to approve a profit share loan policy and failed in their duty to ensure that the commercial lending activities of INBS were conducted in a prudent and responsible way, which would be expected of them in their role as a regulated financial entity. The risks associated with a practice such as profit share lending ought to have been known to the Board members who failed to implement a profit share loan policy.
Under the Central Bank (Individual Accountability Framework) Act 2023, an inquiry decision will not take effect unless confirmed by the High Court. As Mr Purcell did not appeal the CBI’s decision, the High Court is obliged to confirm unless it finds the proposed sanction is manifestly disproportionate or there is an error in law.
If the High Court finds an issue, they can remit the matter to the parties for reconsideration and may specify aspects that should be reconsidered. In this case, although Mr Purcell initially sought a reduction in the fine, the High Court confirmed the original sanction, which was not challenged further, thereby affirming the order.
Any party subject to an inquiry by the Central Bank should be aware of the statutory framework governing such procedures. It should be approached with the necessary understanding of the relevant legal issues, including the operation of the principles of natural justice, and the requisite level of preparation and expert professional support.
For more information on this please see some of our published articles listed below.
Experienced lawyers from KPMG Law LLP’s Financial Services Regulation team can provide firms and individuals with confidential legal advice on these issues.
If you have any concerns relating to such an inquiry, please do not hesitate to contact our team below.
