The banking inquiry held a heated meeting on Tuesday night over allegations of wrongdoing at the committee.

Clerk of the Dáil Peter Finnegan met with members for more than three hours and provided an extensive briefing on the claims made by a whistleblower.

Mr Finnegan told the committee senior counsel Senan Allen had been appointed to conduct an investigation.

A number of members, including Fianna Fáil Senator Marc MacSharry and Independent Senator Seán Barrett, had raised concern over the appointment process.

Mr Mac Sharry also came under fire from members including Labour Senator Susan O’Keeffe and Fine Gael TD Eoghan Murphy for his questioning of Mr Finnegan.

One source said: “It was a heated meeting. Marc and Seán were making the point that it is all well and good for the clerk to make this appointment off his own back but we are the elected faces that have to go out there and answer to people.”

Criticism

“There was some criticism of Marc for making comments on the claims in the media. We have all put a lot of time and effort into this so everyone wants to make sure this investigation is done right.

“The meeting went on for three hours so it was a long and heated meeting.”

The inquiry will meet again on Wednesday to discuss the allegations made by the whistleblower to the committee. The former investigator has made a series of claims about the investigation team working with the inquiry.

In an 82-page document made under the Protected Disclosures Act, the whistleblower alleges preferential treatment was given to some witnesses and alleges potential conflict of interests.

The claims were first sent to a number of members including chairman Ciarán Lynch in April but most only became aware of them last week.

Fianna Fáil TD Michael McGrath said not telling all members was a major mistake that should not be repeated.

“It was a material fact that should have been brought to our attention. Allegations were made that were very serious in nature and which needed to be investigated,” he said. “To learn as we did a number of months later from the whistleblower is not a good way to do business.”

The House of the Oireachtas Service said Mr Allen will be asked to compile a report by the end of August. The terms of reference for the inquiry are being drafted and will be finalised within days. In a statement, the Houses added: "The investigator will not be constrained in terms of the issues he will be examining."