The inquiry into alleged regulatory breaches at Irish Nationwide Building Society by the Central Bank not only enjoys the "presumption of constitutionality" but is "essential for regulation" of the financial sector, the High Court has heard.

The Central Bank also says there is a strong public interest that it inquires into allegations that certain prescribed contraventions were committed by INBS and persons concerned with its management between August 2004 and September 2008.

The remarks were made yesterday by barrister Paul Gallagher SC, for the Central Bank, on the second day of proceedings brought by John Stanley Purcell, a director and company secretary of INBS until he retired in 2010.

Mr Purcell, along with other former officers of INBS, including former chief executive Michael Fingleton, are the subject of a Central Bank inquiry due to begin in 2016.

Constitutional rights

Mr Purcell claims the proposed inquiry violates his constitutional rights, including his right to a trial by an independent judge.

In his proceedings against the Central Bank, Ireland and the Attorney General, Mr Purcell argues the inquiry and the powers it purports to exercise are unconstitutional.

His lawyers asked Mr Justice Robert Eagar for an injunction until his constitutional challenge against the inquiry – brought under part III C of the 1942 Central Bank Act – has been determined.

The Central Bank opposes both the challenge and the application for an injunction.

The Central Bank states Mr Purcell is challenging the entire system of enforcement, which it says is an integral part of the system of regulation and supervision of financial service providers.

Urging the court not to grant the injunction, Mr Gallagher said it was “unfair” of Mr Purcell to suggest it was wrong for the Central Bank to instigate the inquiry following “a comprehensive investigation” it conducted over a long number of years.

Judge Eagar said he would give his ruling on the matter on Monday September 29th.