Owen Paterson: “the momentum is increasing further…”

That would be the ‘momentum’ of the Ministerial Working Group on the troubled Presbyterian Mutual Society which met, again, yesterday.  From the Northern Ireland Secretary of State’s statement

Financial Secretary to the Treasury Mark Hoban came to Belfast for the first time in his ministerial role to attend the meeting. Secretary of State for Northern Ireland Owen Paterson MP chaired it.  First Minister Peter Robinson, deputy First Minister Martin McGuinness, NI Minister for Enterprise Trade and Investment Arlene Foster and Minister of State for Northern Ireland Hugo Swire also took part.

And…

Speaking after the meeting, Mr Paterson said:

“My colleagues on the Ministerial Working Group and I are encouraged by the progress which has been made in the fortnight since we last met.  We remain committed to finding a fair and just resolution quickly and to that end I’m confident that we have taken a significant step forward today.  

“Work has been going on intensively in the several months since the election and the momentum is increasing further.

“We are all conscious of the need to identify a way forward in the context of the Spending Review next month. We know that PMS members are keen to know more about the options we have been working on, and we hope to be able to offer more insight in the near future.  We will meet again in two weeks.”

Of course, they were also “fully aware of the urgency of this matter” when they met in July…

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  • Kaido

    Maybe Vince Cable should be consulted for his opinion on the management of the PMS.

  • John K Lund@btinternet.com

    It is the investors under £20k that are the real sufferers. They were classed as shareholders and so are bottom of the pile when it comes to distribution in a winding up etc. etc. When I became Hon Sec of the Moira Branch UUP I discovered that originally £3k had been lodged with this society. The money is held by trustees who were members of the Presbyterian Church in Ireland. This church seems to have used its name but now denies any responsibility for the missing funds. Reminds me of another local church’s similar rejection of responsibility or culpability.

  • I suppose they have to be seen to be doing something (or maybe to be seen to be talking about doing something). It’s hard to see what that ‘something’ might be. After all, why should any public funds be used to bail out PMS savers in preference to anyone else that’s lost money? The rest of us will be more than a little cross if it is!

  • Erskine Holmes

    The Westminster all party Treasury Committee reported that there was a “regularity gap” that was the fault of both Westminster and NI administrations. It attached no blame to the savers of the PMS. The Chairman, John McFall called for a proportional financial contribution to the rescue of the PMS from the 2 administrations and the Presbyterian Church. All three have accepted responsibilty. The unpaid volunteer directors had professional advisors who did not recommend that they seek FSA registration. Neither the voluntary directors nor the paid staff were part of the bonus culture of the banks or a “mutual” building society like the Dunfermaline which has already been rescued so why be so hard on the PMS? A lot of small savers, charities and churches are depending on a solution.

  • The Dunfermline was covered as,despite its mutual status, it was a building society and all building societies were/are covered by the Financial Services Compensation Scheme. Easy to check.

    If the unpaid volunteer directors had professional advisers who gave the wrong advice then maybe THEY should be held accountable?

    I accpet that some of the PMS investors may have invested there out of loyalty to the church (the same one which washed its hands, shamefully, at the first possible opportunity, only to backpedal somewhat later) but many were greedy for the extra ‘interest’ on offer, including some of my clients. The sooner our society loses the ‘someone must be to blame other than me” attitude the better it will be for all of us.

  • Erskine Holmes

    All the GB credit union “mutuals” were covered but not the Northern Ireland credit unions. Another example of the regularity gap. There should have been no gaps. All UK citizens should have the same protection. There should always be parity and let us hope that all parties in Wesminster will continue to take an all party approach on that. Labour should honour the Brown comitment and back the Cameron rescue. The majority of the 9,500 members were small savers and borrowers. The fate of the professional advisors has still to be decided.

  • “The fate of the professional advisors has still to be decided.” …. Erskine Holmes 23 September 2010 at 11:20 pm

    That had me smiling, Erskine. Professional at what was the first question that sprang into mind and that was quickly followed by who is qualified to adjudge them competent in an investment field which delivers profits to third parties rather than value to shareholders.

    And this short article, tells it like it is, although it is much more likely a tale of how it used to be, for it is no longer acceptable in these changed times. ….. http://thedailybell.com/1391/Politicians-Criminal-Minds.html

  • Observer

    Steve Laird

    I’m afraid you are desperately uninformed on this matter.

    Some people are on the verge of talking their lives because of this crisis – and you are talking rubbish!!

    The formal investigation into this by the Treasury Select Committee found that PMS savers were innocent victims of a fatal regulatory gap – chairman John McFall’s words.

    The PMS savers were repeatedly told they were using savings accounts, not investing in risk bearing investments.

    Although they were issued with shares, these could not alter in value – they were legally fixed in value – and were not linked to the stockmarket.

    Savers were repeatedly assured their was no speculation with their money.

    Anyone else who saved under those terms in the UK had their money guaranteed by government.

    That is why John McFall and many others point the finger at the government for regulatory failure in this case.

    The gap does not exist in GB ie;- it is a fatal regulatory gap.

    Furthermore, the most concrete rescue proposal to date has been a package of LOANS to the PMS of £225m to give liquidity while its loan book and property portfolio recovers.

    http://www.newsletter.co.uk/news/225m-for-PMS-39not-.6231715.jp

    Yes Steve.

    Loans.

    The PMS still earns about £9m a year in rent and is also taking in loan repayments, with a blue chip property portfolio to boot.

    This plan – the most concrete one to date – would not cost the taxpayer as the PMS would be obliged to repay the government loans.

    Steve. People are on the verge of taking their lives on this issue and you have not a clue what you are talking about.

    What are you doing???

    Observer.

    BACKGROUND INFORMATION;-

    http://www.parliament.uk/business/news/2010/02/mps-call-for-regulatory-gap-closure-following-presbyterian-mutual-society-losses/

    http://www.publications.parliament.uk/pa/cm200910/cmselect/cmtreasy/260/260.pdf

  • Oh, and professional never means expert and selfless ….. and in many cases hides and fronts for a criminal disposition.

    Hell, barristers makes their living out of fronting and hiding such cases when defending rather than prosecuting them. And they hold themselves in great perverse esteem.

  • Erskine Holmes

    I had in mind only those professionals who are currently subject to investigation by their own professional bodies. There were no others that I am aware of.

  • Thomas

    I do not not understand why Steve would be a little cross if PMS were bailed out. PMS savers pay taxes which helped to bail out Dunfermline, Bradford & Bingley and others. Is he saying that these institutions should not have been bailed out also. As for professional advisors – how many Directors/Managers on the mainland were considered for disqualification? None. Gordon Brown boasted that not one British saver lost a penny – Untrue; PMS savers have not been able to access their hard earned savings for almost 2 years.Many have no other savings. I wonder sometimes are we part of the UK at all. This is like saying savers in NI did not matter. In short PMS savers have been discriminated against. It is time for equal treatment and for the UK Govt to take full responsibility and compensate these savers in full.

  • Thomas

    In England the FSA is the Registrar and the Regulator.What happened with the PMS in NI could not have happened in the rest of the UK. DETINI is the Registrar for PMS and despite accounts being submitted, it failed to notice how the PMS was evolving and at no time advised the Society that it should have been brought within the ambit of the Financial Services Authority. One wonders did DETINI simply put the acounts into a drawer without any scrutiny. Somehow the PMS fell beneath the “radar” at DETINI. As far as savers being greedy are concerned I reject that assertion. The dividend/interest was based on the Bank of England rate and if luck perhaps 1% higher after which tax was deducted.

    As for FSA regulation it still remains unclear as to whether or not the PMS could or even should have regulated. On one hand a Treasury Minister stated that it was exempt from being regulated whilst the FSA said it should have been regulated. Ultimately the regulatory scheme was devised by HMG. It considered it necessary to tie together
    the Registrar of Friendly Societies and the FSA as far as the mainland was concerned and it failed to achieve that objective in NI.

  • I pay taxes too. If people invest in an institution without checking its bona fides, that is their lookout, not mine. At the time one of my clients invested 100k with PMS the payout was 6% v.4.25% in the best bank deposit. They chose the higher figure, against my advice. Caveat Emptor. As for the fact that many PMS savers had all their savings in the society. How foolish is that?

  • Thomas

    May I suggest that you read the Treasury Select Committee Report; the most influenial Committee in the UK Government, following it’s enquiry into the collapse of the PMS which took place at Stormont in January of this year before you cast assertions. As for Caveat Emptor that report makes it quite clear that the PMS savers are totally innocent victims.Very many savers put their monies in the PMS at the behest of Financial Advisors such as you in the first instance and with that comes a professional responsibility to ensure that the client’s savings are safe..What about your PMS clients? If this is your view I am surprised that one in your position had clients at all in the PMS .I wonder exactly what was your financial advice given the view of the Treasury Committee that no saver could have known that their savings may have been at risk

  • As I said. Those clients invested in the PMS against my advice. It’s their money and they can always choose to take or ignore my advice. I knew that the PMS was investing in property which is illiquid and so if there was a ‘run’ they’d be in trouble which is why I never recommended it to any of my clients.

  • Thomas

    In actual fact the property investments were good sound projects, are all prime sites and have increased in value since being purchased some 10 yeras ago or thereabouts. Even though there was a drop in value during the recession these properties are on the rise if you read the Administrator’s reports. The liquidity problem did not arise as a result of the Society purchasing property..

  • All’s well then? If the property investments are as good as you suggest then surely someone will buy them for a good price and get everyone their money back without recourse to the public purse. My information is different. This is my last posting on this subject as frankly it bores me. That is not meant to be disrespectful to those who have, at least in theory, lost money.

  • nobodno

    Glad to see that action is being taken at long last. Good news for all the savers and for NI

  • I agree with Thomas that PMS has good assets,and that we are innocent savers. There is no doubt that the annual interest was good but we had to pay the taxman as the tax had not been deducted. Many savers paid large amounts from their interest into their Church Building Fund, which was each individuals choice.
    In my case I saved in the PMS in good faith as I thought the money could help other congregations to build new churches and halls or renovate church buildings. I have faith in the Prime Ministers pledge to ensure a just and fair resolution for PMS.
    It is writen in the book of Hebrews “To have faith is to be sure of the things we hope for,to be certain of the things we cannot see”. It was faith that made the Israelites able to cross the Red Sea as if on dry land;

  • Observer

    Steve Laird

    I’m afraid you are desperately uninformed.

    The formal investigation into this by the Treasury Select Committee found that PMS savers were innocent victims of a fatal regulatory gap – chairman John McFall’s words.

    Savers were repeatedly assured their was no speculation with their money. Anyone else who saved under those terms in the UK had their money guaranteed by government.

    Furthermore, the most concrete rescue proposal to date has been a package of LOANS to the PMS of £225m to give liquidity while its loan book and property portfolio recovers.

    http://www.newsletter.co.uk/news/225m-for-PMS-39not-.6231715.jp

    Yes Steve. Loans. Not handouts.

    Sincerely

    Observer

    BACKGROUND INFORMATION;-

    http://www.parliament.uk/business/news/2010/02/mps-call-for-regulatory-gap-closure-following-presbyterian-mutual-society-losses/

    http://www.publications.parliament.uk/pa/cm200910/cmselect/cmtreasy/260/260.pdf

  • Observer

    If I’m so uninformed it’s interesting that BBC Radio Ulster should have chosen me to have a live debate with Sir Reg Empey on the subject.

    The FSA website states:

    “The FSA’s normal practice is neither to confirm nor deny that we are investigating a particular firm or individual. However, in the light of the information already in the public domain about the FSA’s involvement and the public interest in this case, the FSA can confirm that it has investigated the activities of Presbyterian Mutual Society (PMS), now in administration, to consider if it was conducting regulated activities without the necessary authorisation or exemption.

    We have concluded our investigation and have decided that it was conducting regulated activities without the necessary authorisation or exemption.”

    Despite this, the FSA has, for the meantime, decided not to take any action against the directors of the PMS (coverup?) which I find quite disgraceful. If I undertook a regulated activity without the proper authorisation they’d come down on me, rightly, like a ton of bricks.

    You say that savers were assured there was no speculation with their money – who made that assurance? Why have they not be made accountable?

    I am aware of the loan proposal and have no problem with it, provided that it is genuinely a loan, on commercial terms and not subsequently written off in some dark corridor in Westminster or Stormont.

  • Thomas

    Just because Steve gave an interview on Radio Ulster does not mean he was well informed. Others have been interviewed that have been seriously misinformed.

    Perhaps Steve should ask why the FSA did not take action. As I said before it remains unclear to date as to whether the PMS could or should have been regulated by the FSA. As for an alleged cover up I am sure readers would want to know on what evidence Steve bases this serious allegation. The matter concerning the Directors remains sub- judice and all investigations are not completed.

    As far as loans are concerned the Govt should bail out the PMS as it did with the other financial institutions to a cost of £5000 per tax payer. In comparison it would cost £2-£3 to bail out the PMS. A small price to pay for the majority of savers who are elderly, infirm and suffering terrible hardship.

    I do not why people insist in criticising the PMS savers who were totally innocent and deserve equitable treatment.

  • Observer

    So Steve

    I guess everyone who debates against Sir Reg on the BBC must be infallible then. I wonder why thye bothered to have Sir Reg on at all when you have all the answers.

    🙂

    For example….

    You knew that the proposed government PMS rescue plan was a loans package which would not cost the taxpayer, but you admit you chose instead to present it as a hand out and lambast PMS savers instead, ie in your first post above.

    That is hardly informed or fair comment Steve.

    Why did you do that?

    Do you class all your clients who shop around for competitive interest rates as “greedy” – or just those in the PMS?

    Why?

    As for the FSA report, were you not aware that shortly after this FSA statement the Government admitted to liability in the regulation of the PMS?

    The News Letter has reported a pretty credible explanation as to why the FSA covered this up and did not prosecute – and the FSA did not contradict the claim but gave an irrelevant response instead!

    See below.

    ——————————————————————————

    http://www.newsletter.co.uk/news/Government-admits-to-PMS-regulation.5343753.jp

    Lord Trimble noted that the FSA investigation found the PMS was offering financial services but that it decided to take no further action against the directors. “I read into this a tacit admission that there had been a regulatory failure on the part of DETI or FSA or both,” he said.

    He also said the Government had ensured that societies like the PMS were tied to the FSA in England but had ” failed to achieve that object concerning Northern Ireland”.

    A spokesman for the FSA did not deny Lord Trimble’s claims. ” Any Industrial and Provident society regulated with the FSA in Great Britain has an obligation to send annual accounts to us on an annual basis,” he said.

    ——————————————————————————–

    Finally Steve, DETI and professional accountancy body are both investigating directors’ conduct and the PMS auditors, so watch this space.

    Again Steve, I have to ask why you totally ignore the Treasury Select Commitee’s findings???

    Why not take them into account Steve?

    Do they not fit in with your prejudices on this story perhaps?

    Signed

    ‘Have never debated Sir Reg on BBC’

  • Observer

    Also Steve Laird

    The Treasury Select Committee report said there was a fatal regulatory gap into which innocent PMS savers fell.

    The FSA said the PMS conducting regulated activities without the necessary authorisation or exemption.

    I suggest an intelligent person might find those two positions mutually exclusive????

    How can you be found guilty of conducting regulated activities without necessary authorisation or exemption if the main cause of the crisis is a fatal regulatory gap?

    Any suggestions Steve Laird?

    It seems to make Trimble’s suggestion more plausible, doesnt it? That the FSA decided not to prosecute because the PMS directors would simply defend themselves by saying there was a regulatory gap in N Ireland.

    The case would be thrown out of court, and the FSA would have egg all over its face for being party to the regulatory gap in the first place.

    Hence, an easy out for the FSA is to slap them on the wrist and walk away instead, saving its own blushes.

    Maybe you have a better explanation Steve Laird?

    How *can* you be found guilty of conducting regulated activities without necessary authorisation or exemption if the main cause of the crisis is a fatal regulatory gap?

    Observer

  • Observer

    Steve

    If it is so easy to check whether or not the PMS was a member of the FSCS why didnt you check this yourself and warn your clients that the PMS was not a member?
    In fact the reason you warned them against the PMS was because it invested in property, which you said is illiquid in the event of a run.
    Maybe I’m missing something here Steve, but no banks hold all their assets in liquid form. Because they surrender liquidity for higher returns themselves, don’t they Steve?
    So it appears you made the same mistake as PMS savers in not spotting the absence of FSCS cover.
    And it also appears you gave a fallacious argument for not investing in the PMS, as all banks hold much/most of their assets in illiquid form.
    Im no expert so I stand to be corrected Steve.
    Observer