“oversight of the Presbyterian Mutual Society is a matter for the devolved Administration..”

Will Crawley continues his detailed coverage of the Presbyterian General Assembly’s discussions on the illegally operating Presbyterian Mutual Society and those supernatural savers investors. Meanwhile, either before or after he stopped by Downing St, Northern Ireland Secretary of State, Shaun Woodward, MP, fielded some questions about the Society’s predicament in the Commons today. [added permanent link] Update According to the BBC report, DETI Minister Arlene Foster disagrees with Mr Woodward – “Quite clearly is it is not a devolved matter because we do not have the borrowing power to look for the sort of money that we need to put together in a rescue package”. From Hansard

1. Ann Winterton (Congleton) (Con): What assessment he has made of the effect of the collapse of the Presbyterian Mutual Society on savers in Northern Ireland. [277583]

The Secretary of State for Northern Ireland (Mr. Shaun Woodward): The hon. Lady will know that responsibility for the oversight of the Presbyterian Mutual Society is a matter for the devolved Administration, as registration is devolved to Northern Ireland. None the less, she might wish to know that my right hon. Friends the Prime Minister and the Chief Secretary to the Treasury and I are taking a close interest in the forthcoming interim report by the administrator.

Ann Winterton: Bearing in mind that the Presbyterian Mutual Society is in administration mainly because of panic withdrawals following the Chancellor’s guarantee to the UK banking sector, will the Secretary of State persuade the Chancellor and the Prime Minister that a similar guarantee scheme should be extended to provident and mutual societies? After all, what is good enough for the Dunfermline building society is surely good enough for the Presbyterian Mutual Society.

Mr. Woodward: I absolutely understand the hon. Lady’s concern for the 9,500 investors of the PMS, but it is important for her to recognise that there is a significant difference between the status of the PMS and that of the Dunfermline building society, which she has mentioned. It is critical that she understand that the individuals who invested money in the PMS were investors, not savers. She refers to panic withdrawals, but it is also significant to note that no other industrial and provident society has got into similar difficulties. That will not make life easier for the families involved, but I look forward to seeing the administrator’s interim report.

Mark Durkan (Foyle) (SDLP): Does the Secretary of State not recognise that those who put their money into the Presbyterian Mutual Society did so believing that they were savers, rather than investors? That is how they understood the situation. Young families and old people with lifetime investments are now caught up in grievance and distress because of a situation that is not of their making. Will the Secretary of State explain why a variant of the model used to relieve the situation of the Dunfermline building society is not being used by the Treasury in response to the situation of the Presbyterian Mutual Society?

Mr. Woodward: Part of the answer to that is that the PMS is not a building society. Having said that, I believe that it is significant that when the Financial Services Authority looked into the matter, it noted that the PMS was conducting

“regulated activities without the necessary authorisation or exemption”.

The FSA also states that

“we remain in touch with the administrator and, if further information comes to light relating to the issues we have investigated, we will look into it.”

This is an important matter, and I say to the hon. Gentleman that we are keeping a close eye on it. We look forward to seeing the report from the FSA and from the administrator as soon as possible.

Dr. William McCrea (South Antrim) (DUP): In October, the Treasury guaranteed that no British customers of Icesave would lose their savings after that Icelandic online bank collapsed. The Prime Minister went on to issue a blanket guarantee that its 300,000 UK customers would get all their money back. Why can he not give the same guarantee to those who have savings with the Presbyterian Mutual Society? Does the Secretary of State not realise the gravity of the situation for many ordinary, decent people in Northern Ireland?

Mr. Woodward: We do recognise the gravity of the situation, which is why the Prime Minister, the Chief Secretary to the Treasury and I are keeping a close eye on it, and why the Prime Minister has been in correspondence and discussion with the First Minister and the Deputy First Minister, and looks forward to having further discussions with the First Minister later this month. We appreciate the gravity of the situation, but we equally have to recognise that, under the law, those people who put money into the PMS did so not as savers, but as investors, and that the regulation of this body in Northern Ireland is the responsibility of devolved government in Northern Ireland, not of Whitehall. Nevertheless, we do not intend to say simply that because the matter is the responsibility of the Department of Enterprise, Trade and Investment, we have no interest in seeing what we might be able to do to help. That is why my right hon. Friend the Prime Minister continues to take an active interest in the matter and will engage with the hon. Member for South Antrim (Dr. McCrea) and his colleagues about it.

John McFall (West Dunbartonshire) (Lab/Co-op): Since the Treasury Committee took evidence in Belfast a number of months ago on the banking crisis, I have continually been in contact with many of the distressed savers, as well as with the moderator of the Presbyterian Church, Dr. Donald Patton. I have also had meetings with Lord Myners and I have written to the administrator, Arthur Boyd. There is an issue here about the Financial Services Authority getting in touch. If the Northern Ireland Executive, the Presbyterian Church itself and Her Majesty’s Treasury got together, I think that we could get a solution. There is a need for added urgency, and I ask the Secretary of State to take that message back to ensure that we get justice for many of these distressed people.

Mr. Woodward: I welcome my right hon. Friend’s intervention, and it is a mark of his interest in these matters that he came and took hearings in Northern Ireland. I know that all hon. Members would want to welcome his work and contribution. As I said, the Prime Minister continues to take an active interest the matter, as does my right hon. Friend the Chief Secretary, and we will continue to follow it up. There are issues about the regulation of bodies such as the PMS in Northern Ireland and they will need to be addressed. There will be lessons to be learned for the future. For the 9,500 investors, I appreciate that there are real and pressing questions—particularly for those who invested less than £20,000. We all have a duty to do what we can to help them—and that also goes for my right hon. Friend the Prime Minister.

Sir Patrick Cormack (South Staffordshire) (Con): Is the Secretary of State aware that the Select Committee on Northern Ireland Affairs is very grateful to the Treasury Committee for the initiative that it has taken? We would have liked to look into the matter, but as the Secretary of State says, it is devolved. Every member of the Committee has received representations that underline the severity of the situation, so will he please take up the suggestion just made by the right hon. Member for West Dunbartonshire (John McFall), the Chairman of the Treasury Committee, and convene a meeting of all the interested parties to try to reach a solution?

Mr. Woodward: As always, I welcome the advice of the Chairman of the Northern Ireland Affairs Committee, who always has a considered approach to these matters. I am prepared to work to bring people together. Equally, however—I am sure that the hon. Gentleman shares my view—I am very conscious of the fact that if government is devolved, that must be recognised, and we cannot suddenly be seen to be trying to take control of an issue through the back door simply because we are not quite sure whether it is being handled in the way we might have wanted. This is an issue on which I do not think the 9,500 investors will thank Members of this House or of the Assembly for simply saying, “Bureaucracy means that we cannot help.” I am prepared to break the bureaucracy, and if that is taken in which it is meant, I am prepared to work with the hon. Gentleman and other colleagues to help those investors.

Andrew Mackinlay (Thurrock) (Lab): I have listened carefully to what the Minister has said, and he now seems to be warming up and willing to take this on. It does not matter how often he says that the Prime Minister takes an active interest in the matter; the test is whether he is going to do anything with some dispatch. That is what the House wants. It is not a question of devolved administration; the issue has arisen against the backdrop of the economic and banking crisis, which is a matter for the First Lord of the Treasury, the Prime Minister. This House wants him to proceed as if this were happening in Greater London, where 900,000 investors would be kicking up, and everyone would be demanding debates and action this day.

Mr. Woodward: As always, the Churchillian recognition of my hon. Friend is helpful in allowing me to enjoy this a little more; I am tempted to say I am enjoying this, but perhaps I should resist that.

We have to recognise again that these are not savers; they were investors. As such, they made an investment as risk capital in the form of withdrawable shares and loans. There is an issue about whether or not this should have been regulated; it was registered; it should have been regulated. There is an issue that I continue to want the FSA to look at, but I am not trying to evade our responsibility. If we can find a way to help these people, we should do so. I am prepared to break the bureaucracy to do it, if it is at all possible.

Mr. Owen Paterson (North Shropshire) (Con): It was the Government’s guarantee to other banks and the failure of regulation that brought about the collapse of the Presbyterian Mutual. I met the former moderator and the general secretary on Monday, and I was shocked to learn that they had written to the Prime Minister three times since November, but he had sent only one holding reply. I was also surprised to find out that the Secretary of State had not met them. The Prime Minister is the architect of the current financial regulatory system. If his Presbyterian conscience extended to Dunfermline, why will he not apply it to the Presbyterian Mutual?

Mr. Woodward: First, I want to acknowledge that the hon. Gentleman is the most assiduous visitor to Northern Ireland who has ever held the Opposition spokesman’s job. He cannot help but be there at least half of every week, and we should acknowledge that. I just wish that he would sometimes learn a bit more while he was there. As I have said to him, the Presbyterian Mutual Society is made up not of savers but of investors. The issue is devolved, and I know he has a problem with that—of course, his party has formed an alliance with the Ulster Unionists in the hope of making some progress nationally—but the fact is that devolution has happened. He must respect, rather than undermine, devolution. The Prime Minister has taken an interest in the matter and met the First Minister and Deputy First Minister on it. We have held discussions, and further meetings will take place. But the hon. Gentleman must respect the fact that devolution does not mean bringing the matter back to Westminster through the back door.

Mr. Paterson: Contrast that with the clarity of the right hon. Gentleman’s successor, my right hon. Friend the Member for Witney (Mr. Cameron), who said at a public meeting in Ballymena two weeks ago:

“I am not here to make spending promises. But what I can tell you is that if I was Prime Minister I would take a very good look at whether people are being treated fairly. So I think this is a real case for the Prime Minister to think again”.

So, will the Secretary of State answer directly the question put by my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack)? Will the right hon. Gentleman agree to take a delegation representing the Presbyterian Mutual and the savers to see the Prime Minister in the next couple of weeks, to find a solution to protect many innocent people who fear the loss of their life savings?

Mr. Woodward: Once again, we recognise the problem of the 9,500 savers. The hon. Gentleman refers to the leader of his party, the right hon. Member for Witney (Mr. Cameron)—and I must admit that I know a thing or two about Witney. He did travel to Northern Ireland, and he said to people that he was not there to make spending promises. As my hon. Friends know, that is probably because everywhere he goes he is promising to make 10 per cent. cuts, should we ever see him in government. The people of Northern Ireland should pay careful attention to the words of the hon. Gentleman’s leader, because he would be very bad news for them. He does not understand the problems of Northern Ireland or of the Presbyterian Mutual, or that the Presbyterian Mutual is made up of investors not savers. As I have said, my right hon. Friend the Prime Minister will meet the First Minister and Deputy First Minister again to see what can be done to help such people, not with empty slogans and hollow promises but with real action—and not by doing nothing.

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  • Bill

    It is my view that no individual involved in this situation should receive any money from local or national government.

    The responsibility for the fact that people ‘thought’ they were savers and not investors lies, perhaps, in two places:
    – The individuals themselves. Heck, if I’m putting my money somewhere I want to know what’s being done with it, by whom and what security I have. It’s not my responsibility as a tax payer to support those who don’t take due regard for the money they earn
    – Perhaps responsibility lies with the Presbyterian Church for allying itself with a financial body and giving members the (false) impression that PMS was a form of bank.

    What I know for sure in this situation is that those who put money into PMS are investors and NOT savers and should be treated as such. Investments can go down as well as up and this one went down.

  • Seceder

    Am i crazy or does Woodward say in his penultimate comment membres of the PMS are not savers but investors and then goes on to say in his final comments “Once again we recognise the problem of the 9,500 savers”

    For goodness sake make up your mind – they are either savers or not –

    Clearly Woodward is as useless in this crisis as our Assembly is.

    If there has been a failure of regulation of the PMS – who is responsible for that – DETI??

  • Random

    Bill – you’re wrong. PMS saver.

  • SM

    Random

    Did they tell you they were a bank or a building society?

    Did they issue an account passbook or send statements as a bank rather than an investment company?

    People were investors not savers from the law’s perspective but were they told otherwise? And if so do they not have a claim against whoever made those false representations?

  • Bill

    Random, please explain how it’s savings?

  • drumlins rock

    I think most of us are familiar with Credit Unions, when you join one you become a “shareholder” and recieve a “dividend” but it is universally accepted as a form of saving and dare i say “poormans bank” most people who “invest” money there do not in anyways regard it as the same as buying shares in a business but as savings. Most people I know who have money in the PMS saw it as basically a large Credit Union.

  • king

    None of these so called “savers” are in any right to reclaim monies invested, as there are just that – investors.
    To cry wolf now, claiming they “thought” they were savings is just nonsense and a sorry attempt to recoup on a bet that went horribly wrong.

    Dont be naive, their main intention, as always was making sure that Ulster property and land remained in the hands of the old establishment as it has been minipulated to as such for over 600 years!

    They knew right well that they were investing, and not only that, it was the the most horrible sort of local “investing” – motivated by sectarianism.

  • jivaro

    We’re missing some rudimentary information about the story here:

    Who were the geniuses in the PMS who thought they were running a bank? Who were the geniuses in DETI who were supposed to regulate the PMS? Who did the PMS geniuses hand out the missing money to? What was the money loaned for? Who are the defaulters? Where are the assets? Did the PMS have professional indemnity insurance? If not why not?

    This is a straightforward enough financial funnybusiness story that any decent financial journalist should have little trouble casting light on.

    Shaun Woodward makes a perfectly reasonable point about the difference between investors and savers. Investors must take a different route to recovery of their assets if a scheme goes belly up – but the questions above still need to be answered.

    Anybody who can help with that?

  • iluvni

    As an aside, interesting to note that in total only 6 NI members of Parliament bothered their arses turning up to Northern Ireland Questions today.
    The 3 sdlp members plus McCrea, Donaldson and Wilson of DUP. All asked questions.

    Apart from the 5 SF members who refuse to represent their constituents (and should be kicked out), where were the other DUP members plus Her Ladyship from the UUP?

    Is the UUP so weak now that their sole MP isnt required to put in even a token appearance now and again?
    And what about the DUP… double jobbing getting in the way again?

  • Bill

    drumlins rock, that people ‘thought’ they were putting money in a large Credit Union is exactly the issue. They ‘thought’ wrong. That they thought wrong is not my responsibility or any other taxpayer.

    When people put money in something – whether a bank, a Credit Union or PMS – they should know what they are doing. PMS investors thought they were on to a good deal so put their money there without due investigation. That isn’t my responsibility.

    Although I am not certain of this, the Presbyterian Church may have helped create the impression that PMS was for savings and not investment. If that is the case, in my view The Presbyterian Church bares a significant responsibility but the taxpayer certainly doesn’t.

  • Rory Carr

    Will Crawley continues his detailed coverage of the Presbyterian General Assembly’s discussions on the illegally operating Presbyterian Mutual Society and those supernatural savers investors.

    Be careful, Pete. A simple belief in the supernatural would not be sufficient to define the believers as themselves being somehow supernatural. Unless of course those making the definition have themselves a supernatural belief that this is somehow possible.

    Is there something you’re not telling us, Pete?

  • Seymour Major

    Everybody here should recognise that there is a difference between the Conservative and Labour approaches to this crisis.

    I say this with respect to John McFall MP who has made the correct suggestion and Andrew McKinlay MP. Both of these MPs seem to be embarassed by the official handling by their leaders in Government.

    Mr. Woodward, keeps emphasising the distinction between “investor” and “depositor” and also that the matter is devolved. As Mark Durkan says, many trusting individuals put their money in believing it was like a deposit. Banking regulation is also a matter for the treasury. The institution may be in Northern Ireland but this is not purely a devolved matter.

    There is no doubt that there is fault here by those who set up the fund and that officials in the Church were involved but they are not capable of resolving it on their own. Neither is Stormont.

    This is a case where a solution has to be discussed between the Church, Stormont and the Government.

  • Pete Baker

    Rory

    Just read it as ‘investors in the supernatural..’

  • Rory Carr

    That’s better.

  • Bill

    noname, that’s some excellent information. Does anyone have anything more up to date?

    From the information you provide PMS is not unlike a Credit Union and would therefore be administered by the FSA accordingly.

    To pick up on Seymour Major’s point, if noname’s information is correct and public in recent years then the responsibility for this debacle lies in 3 places:
    – Individual investors for not reading the small print
    – The Directors for acting outside that to which they had agreed
    – The Church for supporting PMS by advertising the mutual benefit.

    This is not the responsibility of the taxpayer, Stormont or Westminster.

  • noname

    Bill
    Your first bullet presupposes there was small print contradicting the directors’ headline grabbing categorical assurance of no speculation under any circumstances, and their use of established banks.
    Possibly, but I would doubt it.
    Furthermore, in a developed society that supposedly has strong financial regulation (which PMS somehow seems to have evaded – start asking who is responsible for that), how many ordinary savers study the small print and – critically – periodically revisit it thereafter once they have got used to a steady flow of annual interest payments that they anticipated on opening the account.
    Ordinary savers don’t, and probably never will, do that.
    Savers experienced what they had signed up for – until events of the past year unfolded.

  • dave

    Jesus, are some of you people on crack?

    INVESTORS didn’t get a bank statement when they invested, they got statements of how many shares they held.

    Are you seriously suggesting that someone, somewhere should have called round their houses and said –

    ‘Now, you know that you gave them your money, and they told you it was shares you were buying? Well I just wanted to check that you actually understood that and didn’t incomprehensibly decide that in fact you were putting money in one of the major high-street banks which wasn’t offering you the exclusivity and high rates of interest of this mob?’

    I know a feature of the church is that no-one is responsible for their own actions, and that might be fine in the little dreamworld they live in, but when they start deciding that taxpayers need to bail them out of that delusion it is a different matter.

  • noname

    So is a saver in a typical (NI) high street product such as “Midas Investment” a “saver” or an “investor”?

    http://www.northernbank.co.uk/en-gb/Personal/Savings-and-investments/Savings/Products/Pages/Midas-Investment.aspx

    Let Northern Bank know if they should rename their product.

  • noname

    Or are Nottingham savers just “savers” or dabbling in “shares”?

    http://www.thenottingham.com/main.asp?p=1360

    “Share account
    An account which gives you membership rights. Most of our accounts are share accounts.”

    Considerable scope to spin according to one’s personal agenda.

  • Paul

    If the PMS was operating as an illegal organization(as the government insists they were) does that mean the Pesbytereans are themselves an illegal organization

  • hard cheese

    It pretty basic: The governemt cannot bail out the PMS.
    It sends a very bad signal- What next? every little investing club in the country to get bailed out, just because they bark loud enough?

    Investments = risk (no capital protection)

    Savings = risk free (up tp 50k)

    Simple but crucial difference – RISK!

    If PMS risky investments have turned sour, and some feel hard done by, no help can even be contimplated from the tax payer – sue the sleeping directors and the few wolves who where in amongst the flock. Theres a few of them who are men of means (property developers, estate agents and local business men);)

    JC would be laughing his leg off at the squirming lot of em!

  • brian

    u pay ure money n takes ure chances there investors they lost get over it im glad lettin on they were saving up to b gypsies lookin down on us wee frilly hats on listening to yer man in the pulpit gimme gimme while i worked for their forefathers in the mill wee wernt gettin no pension lucky gettin yer dinner

  • pms saver

    There is no doubt it is confusing to all of you – challenge you to go to the doors of your financial institution and be told – you can’t have your savings – money frozen/gone!!!

    We did not mis read the small print:

    The small print said Savings – save within your Church.

    Why is it okay to bail out RBS etc and go further than what they had paid FSA for – ie up to £50k –

    Hope you never lose your savings!!!!!

  • 0b101010

    There is no doubt it is confusing to all of you

    Now, now, that’s now how you beg for our savings.

    No, it’s incredibly simple. You gambled and you lost. I’m not going to pay for it.

    Why is it okay to bail out RBS etc and go further than what they had paid FSA for – ie up to £50k –

    Unlike PMS, RBS is a legally operating, regulated bank that likely paid into the FSCS, and are therefore covered by it. Insurance is not free. Investment is not without risk.

    Hope you never lose your savings!!!!!

    Hope no-one ever believes themselves entitled to your savings to cover for their gambling losses!!!!!1!

    If the PMS was operating as an illegal organization(as the government insists they were) does that mean the Pesbytereans are themselves an illegal organization

    No.

  • noname

    And the banks weren’t gambling? – recklessly?
    Reality check please.
    And all taxpayers are paying for it, as will ther children.

  • Big Maggie

    dave,

    “Jesus, are some of you people on crack?”

    Sometimes, when attempting to follow the rough and tumble of NI politics, I wish I were :^)

  • 0b101010

    And the banks weren’t gambling? – recklessly?
    Reality check please.
    And all taxpayers are paying for it, as will ther children.

    Again, unlike the PMS, the banks were operating legally, under regulation and paying into the FSCS, which is why deposits from their savers were covered.

    The PMS was not a bank, operating illegally, outside of regulation, and not paying into the FSCS, which is only some of the reasons why investments from their shareholders are not covered.

    There’s your reality check.

    “Other people are getting hand-outs from the taxpayer, why can’t we” is nowhere near a valid argument to steal more money from my pocket.

    The usurers, Presbyterian hierarchy and politicians with crocodile tears streaming down their faces should be posed with this question: “When you ask for taxpayer money from the government to cover investment losses, where do you expect to steal it from: Education? Health? Pensions? Benefits? Social housing? Increased taxes?”

  • concerned

    They sat there smug for years happy in the knowledge that their little secterian investments club was buying up land and property in NI and the rest of the UK, kepping it out of the hands of the great unwashed or god fobid the “other side”.

    Now all of a sudden the bet goes wrong and its “woe is me” mentality with the beggin bowl out. No chance!

    Now, I do feel somewhat sorry for the aul grannies who where misled, but they should all get together sue the snakes that ran this thing and be done with them!!
    The government could support this effort, but that is it – no handouts!