Presbyterian Church and the PMS

My mother being a regular attender at her local Presbyterian Church had the opportunity today to sign a petition to the Prime Minister; the same petition is available online. The Presbyterian moderator Dr. Donald Patton has also issued an open letter which was printed in the News Letter and is available (here) on the Presbyterian Church website. The moderator is undoubtedly correct to appeal to local politicians and the Prime Minister about the plight of the savers in the Presbyterian Mutual Society. It is also undoubtedly true that the government’s pledge to support the banks helped produce the run on the PMS which precipitated this disaster. However, the PMS seems to have followed a very flawed business model by investing almost exclusively in commercial property.
The Moderator in his letter explains: “While the central Church is meeting acute needs by offering limited grants through benevolent funds accessed by Ministers, it does not have the resources to respond to major needs except the General Assembly decides otherwise.” The Presbyterian Church has stated on a number of occasions (completely legally correctly) that it is entirely unrelated to the Mutual Society. As such the moderator’s actions are laudable. There is, however, a very big “BUT”: that “but” is that the PMS was very heavily advertised in numerous Presbyterian Church publications, there were articles extolling its virtues on a number of occasions. As such, although the church bears no legal responsibility, I would submit there is a very substantial moral responsibility to savers in the PMS; many of whom were people of modest means.

In the part of the letter I quoted above the moderator states that it cannot respond further “… except the General Assembly decides otherwise.” I would submit that along with petitioning the government the Presbyterian Church’s call would acquire much more moral weight if Dr. Patton convened an emergency meeting of the General Assembly in order to attempt to find further resources, if necessary by mortgaging or selling church property, some of which is valuable. In the current market they may well get less than they would want for such properties and as I have already stated they are under absolutely no legal obligation so to do. However, especially in this, the 150th anniversary of the Year of Grace, it would be a potent symbol of the church’s commitment to society and would be a powerful witness to the Grace of God and the seriousness with which God’s moral laws are viewed by the Presbyterian Church.

  • Pete Baker

    No legal responsibility, Turgon?

    You should pass that advice onto the Moderator.

    Because, according to Will Crawley, he isn’t so certain.

    I also asked the Moderator if he and his colleagues were concerned about the possibility of future legal action from any PMS investors who may argue that the Presbyterian Church should underwrite their personal losses. He said: “We know of no such situation at the present … but, yes, that possibility is in our minds; that is something we’d have to meet if that may occur.”

    What is certain is that Government has no legal obligation to respond to those pleas, whether from the Moderator or from the NI Executive.

  • Eddie


    This from a church that started off by saying that the whole thing had really nothing to do with them.

    And this from a church now discussing business and money affairs on the Sabbath! And at church, too! Oh, horror!

    John Knox, where are you?

  • Glencoppagagh

    PMS did not invest “exclusively in commercial property”.
    If you had consulted the administrator’s report, you would have seen that investment property represented barely half of total assets in 2006 and has since declined. Mortgage lending on the other hand grew rapidly in the last couple of years.
    There was a serious mismatch of maturities which was exacerbated by a sharp reduction in liquid assets.

  • Turgon

    Sorry I stand corrected. However, the thrust of my argument that there is a moral argument in favour of the General Assembly doing something is unchanged.

    If the suggestion is that PMS investors might sue (successfully or otherwise) the church it would clearly be an even stronger reason for the church to provide monies now rather than fight a legal challenge.

  • Was the PMS the only financial institution to advertise?

  • Turgon

    Mark Dowling,
    It may not have been the only one but the PMS was certainly the most heavily advertised financial institution and I am pretty certain that there were non advertising articles in the Presbyterian Herald extolling the virtues of the PMS.

  • Glencoppagagh

    Mind you, in the context of the PMS’s fundamental problem, there is little difference between between mortgages and property since both are highly illiquid. However, there is a lot of laughable nonsense being talked abut the PMS holding ‘toxic’ assets.

    Much of the blame for this debacle resides with those who suddenly took their money out in October. Lets be charitable and assume that they didn’t foresee the consequences for the PMS.
    If they are faithful Presbyterians it might be fitting if they at least owned up and begged forgiveness.
    Having said that, the management had allowed cash levels to fall too low.

  • joeCanuck

    Why don’t they appeal to their fellow Presbyterians?
    You know, the brothers in Christ that beggared their neighbours by starting the run on the “bank”.
    Don’t they have any responsibility for this debacle?

  • Driftwood

    Well if the government can bail out Icesave etc, why not local institutions.
    I thought Presbyterians were anti gambling though? And that is what they were doing.

  • joeCanuck

    Great minds…. Glencoppagagh

  • Glencoppagagh


  • joeCanuck

    Their brethren share a large responsibility, Glen.

  • missfitz

    One of my thoughts on this whole matter is that if the government were to intervene, then there would have to be a wholesale review of the kind of governance and regulation that would have to be imposed on mutual societies.

    I hate to sound ‘mean’, but people who chose to invest in non regulated and non-guaranteed societies were making that choice freely and with knowledge that their money was not protected. It is almost akin to putting your money under the mattress and asking the government for a bail out if you get robbed.

    The run on the bank was not as significant a factor as the use to which the funds of a mutual society were being used and invested.


    The Presbyterian Church lent it’s name to this society and the scheme mostly involved Presbyterian members so the Church cannot absolve itself from blame or responsiblity. Morals play a big part in religion so the Presbyterian Church surely has a moral responsibility here. In the same way that the Catholic church has a moral responsibility to sexual abuse victims, which it has abdicated, the Presbyterian Church does likewise here. How can the Moderator or any minister stand in a pulpit and preach to the congregation knowing the Church has failed it’s members? There are many retired and loyal Church people who must feel very betrayed and let down. Irrespective of your denomination one’s heart and sympathy goes out to the Presbyterian members who invested in what they believed was ‘their Church savings scheme’. Some leadership and direction is surely called for from the Church heirarchy? However I wouldn’t get my hopes up on Government intervention. It looks like most of the society’s investments and holdings are tied up in a very unstable housing and stock markets so it’s a waiting game. The other side is you takes your chances so you takes your losses.

  • ZoonPol

    If the State bails out one then they bail out all. Surely the directors of this Mutual Fund are fiduciaries and as such are culpable under contract and tort law; also, if this society was trading or give the impression that it was linked to the church then as they have special TAX status they should not expect to give that status up for a bail-out, if any is forthcoming.

  • ZoonPol

    Sorry i meant they ‘should expect to give that status up’ – omit the not. I also find it rich that the savers who expected to see their savings grow did not know why it did so and did not appreciate that, like horse-racing its gambling albeit the risks are better.

  • Disgusted

    This ‘open letter’ states the following:

    Investors are asking many detailed questions about how this has happened, and what the future holds. I am given to understand the Administrator, as an Officer of the Court, is legally constrained in what he can say. This in turn has placed the Church, its officers and myself in a very frustrating position. We do not have the information to answer questions being asked and have no access to the relevant information though a meeting with the Administrator this week did help clarify confusion around the voting issue.

    For the moderator to say that ” We do not have the information to answer questions being asked and have no access to the relevant information” is absolutely pathetic and are spineless remarks . I suggest that if he requires information that he speaks to any of the well placed PRESBYTERIAN MINISTERS who are listed as DIRECTORS of the Mutual Society. The question must be asked HOW can a Minister be wholly dedicated to the well being of his congregation whilst finding time to being a Director of a Mutual Society….in short, he cannot serve two masters. SHAME ON THE PRESBYTERIAN CHURCH.

  • Glencoppagagh

    I’ve seen a lot of guff written about PMS and some of it’s appearing on this thread.
    “The question must be asked HOW can a Minister be wholly dedicated to the well being of his congregation whilst finding time to being a Director of a Mutual Society…”
    Very silly. Being a director, even of a large public company, can entail no more than attending a meeting once a month and I doubt that it was a more onerous duty at the PMS.
    “The run on the bank was not as significant a factor as the use to which the funds of a mutual society were being used and invested”
    What should have the money been invested in then? When the investment property was acquired, I doubt you’d have found many Presbyterians thinking it was too risky an investment. Incidentally, it appears that this property investment is generating a very healthy yield which suggests that it wasn’t acquired at the top of teh market. It was also situated outside NI which offered some degree of diversification.
    The one big question that PMS management need to answer is why they reduced liquid assets in the year to March 08.

  • missfitz

    This from the FSA site:

    ‘Co-operative societies are run for the mutual benefit of their members, with any surplus usually being ploughed back into the organisation to provide better services and facilities.’

    So, no Glencoppagh, I do not accept that speculative investment was appropriate. My local Credit Union does not do this, and the money in the Credit Union is quite genuinely paid back to investors as annual dividends

    I honestly do not know if the PMS was regulated by FSA or whether they sought an exemption. Certain organisations can seek such an exemption, and it limits the protection that members can seek.

    I feel very sorry for all of the innocent investors in PMS. At the moment, I am delivering seminars on Money and Budgeting and 2 weeks ago I met 3 people who had lost tens of thousands of pounds in the PMS. They had acted in good faith, but as I said before, you must never allow anyone to take your money without knowing how secure it is. Disasters like this are what force regulations in banks and societies, and my contention is that if compensation is sought, a root and branch approach to altering regulation and exemptions for mutual societies must ensue.

  • Disgusted

    Glencoppagagh ,

    I stand by my remarks. Don’t try to tell me or any other reader that any director simply focused on PMS business during the ‘ monthly’ board meeting. You appear rather defensive of the directors…would’nt be a Minister by any chance?

    Incidentally, I wonder how many Directors and well informed Ministers managed to get their money out on time ?

  • Cushy Glenn

    the PMS was on the agenda at General Assembly every year, as part of the General Mission report.
    Legally there’s no connection of course- any more than there is with the football team in Londonderry which has the church badge on its shirts and plays under the name (Presbyterian Working Men’s ) Institute

    But they don’t advertise ‘Stute’s fixtures in the Presbyterian Herald, or include them in the annual report….

  • Glencoppagagh

    No I’m not a person of the cloth. Maybe the PMS directors should have taken a more informed interest in its affairs notably the switch out of cash.
    Who took their money out, why and when, is certainly a matter of great interest. I think it should be known. Perhaps one of those clerical directors could quietly pass on a few names.