The begining of the end of the PMS saga: and the continuing slow end of the PCI?

The cheques for the PMS savers are finally arriving. After three years this sorry saga is beginning to come to an end. A number of people deserve some credit in this affair but there are others to whom blame should rightly be attached.

The savers themselves are completely innocent. There may have been claims that the PMS scheme was too good to be true but that is easy to say from the position of the financially astute (or with hindsight). The PMS largely targeted older savers, offering good interest returns and claimed levels of risk equivalent to building society saving accounts. The scheme was continually promoted by the Presbyterian Church and indeed the social good it could do was repeatedly played up. My own mother (who is financially astute) always felt bad that she had not put any money into the PMS (until it all went wrong obviously).

The Stormont executive and the political parties here do deserve some credit. They campaigned for the savers to receive their money back. Jim Allister was one of the most vocal but all the political parties, including the nationalist ones presented a united front on the issue.

The British government is also not to blame. Their bank guarantee may well have been the catalyst for the disaster but the simple fact was that the government guaranteed bank and building society accounts. It is hardly the fault of HMG that the PMS was utterly disingenuous about the nature of its savings scheme. Furthermore the PMS was clearly running a bank without the proper authorisation which is against the law.

At this point the Stormont executive might be blamed to a certain extent as the regulation of the PMS was a devolved matter (see Pete’s excellent series of articles on the subject). However, the society had in actual fact been operating as a bank long before devolution was resumed: as such a little blame might be able to be laid at the door of the executive and before them HMG itself.

The lion’s share of the blame, however, must be pinned squarely where it belongs: on the PMS leadership. The PMS’s board seems not to have done anything about its illegal activities. It is still unclear who should have known or done something about this state of affairs and why they did not. The News Letter reported in March on proceedings for disqualification for a number of former PMS Directors. One former director of the PMS was also vetoed for a judicial appointment by Ken Clarke. He then told the News Letter that he was disgusted and that Clarke’s decision had cost him a significant amount of money: he seemed oblivious to the irony of a PMS Director complaining about lost money.

The other organisation which cannot shirk its moral responsibility despite all its attempts to do so is the Presbyterian Church. When the PMS foundered the Church was extremely rapid to distance itself from the PMS. It very rapidly pronounced that the organisations were completely unrelated. Whilst that may have been true in law it must be remembered that that is exactly the opposite of the position claimed by the Church when the PMS was doing well. Never did a copy of the Presbyterian Herald lack at least one advertisement for the PMS; at every General assembly meeting the merits of the PMS were praised to the rafters. When the society collapsed the rush to say “I never knew him” was remarkably like Peter’s denial of Christ. Unlike St. Peter, however, the Presbyterian Church was extremely slow and only partial in admitting its betrayal. Although some laud Stafford Carson for his work on the subject, it must be remembered that he was less than forthcoming about the amount of valuable property the PCI owns (I know Drumlins Rock for one disagrees with me but I stand beside my allegation that he was disingenuous in the extreme). The PCI ended up paying £1 million to the savers but Liam Clarke’s questions about the £42 million in the PCI’s central investment portfolio have never been answered.

The PCI presumably hopes that it can put the utter debacle it has suffered behind it. However, as the News Letter notes here a significant number of once very active members of the PCI have lost all faith in that institution: not really it seems over the loss of money but more the manner in which the church has conducted itself. I blogged myself about leaving the Presbyterian Church before this scandal broke: the issues I mentioned there which have helped cause so many to leave have not gone away. Adding the church’s behaviour over the PMS to the mix will only help in the gradual dwindling of a church which seems out of ideas and over this scandal at least completely without moral legitimacy.

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  • We had big cash payments for UDR members (or way that the UVF as outlined on another thread), another for RUC members, one on the way for prison officers and here’s a big bailout for Presbyterian property investors (not “savers” by any stretch of the imagination). Is there anyone left with an association to the Protestant section of the community who hasn’t received free cash from the taxpayer?

  • nightrider

    Ulick
    yes, but I’m hoping Stormont will refund me the tenner I had on Rangers to beat Malmo last week. Hopefully Arlene is negotiating with Paddy Power as i write

  • Stu DeNimm

    >We had big cash payments for UDR members
    >(or way that the UVF as outlined on another thread),
    >another for RUC members, one on the way for prison
    >officers
    People who served the state during conflict got help when they needed readjustment in peacetime. That’s fair play. The provos tried to do the same on their side with Northern Bank, but unfortunately they didn’t think it out too well.

  • Stu DeNimm

    >bailout for Presbyterian property investors

    in the States and in the south, only big investors who can afford large campaign contributions get bailouts. That’s anglo-american capitalism; the capitalists get the profits, and the taxpayers absorb the risks. Score one for bailing out the kind of people who invested in PMS instead of the kind of people who held AIB bonds .

  • Neil

    The provos tried to do the same on their side with Northern Bank, but unfortunately they didn’t think it out too well.

    That’s highly debatable. Whoever carried out the raid got away with 16.5 million in useable notes and is still at large. I’d say they think it was very well thought out indeed.

  • Drumlins Rock

    Turgon, without rehashing old stuff I am glad the PMS members are getting their savings returned to them, at least the UUP Tory link has delivered on something. I also hope the PCI and other faith groups have learnt God and Mammon don’t mix, even with the best of intentions. Locally I havn’t heard of many instances of the debacle affecting churches, but maybe in other areas it has, at the end of it all I think it will have only a marginal effect on numbers, hopefully it will en-fuse some humility at church house.

    Generally institutions like the PCI don’t fade away to nothing, maybe we will eventually merge with the Baptists! But there are rumblings in the pews regarding the fading of the democratic ideal the denomination is based on, with most of the church governance going on “in committee” rather than at the full Presbytery or General Assembly, and significant changes being push through buried deep within the jargon laden blue book.

    Thankfully the congregation I attend is strong and slowly growing, while clearly evangelical it strikes a good balance between conservative and liberal, traditional and modern, we are however quite independent in many ways! The congregational ideal is still strong and apart from a useful label & theological basis the wider denomination does not play a big role in normal events. However recently having become vacant we faced the inquisition of Union Commission, and were threatened with the purgatory of “reviewable tenure”, thankfully we won out and are free to issue a call, the rebellion was forestalled!

    I do not get particularly hung up on denominations, but I like the PCI system and basis, however the structures are not working, change is needed before it is too late.

  • CharlieMcCarthy29

    Obviously there were those who were investors but it seems clear that the majority thought that they were simply saving and that a church administered fund would be conservative and safe.

  • separatesix

    Ulick Any compensation they received could never make up for having to put up with the likes of you in society!

  • CharlieMcCarthy29

    separatesix,

    Your man playing is offensive.

  • sonofstrongbow

    No it isn’t.

  • CharlieMcCarthy29

    Sorry, sonofstrongbow, but I find all comments that consist solely of man playing to be offensive. You are entitled to your own opinion, of course.

  • nightrider

    Didn’t realise Presbyterians were such gamblers.
    Took the money in the good times, but then they drew a bad hand. And lost. Most gamblers accept this and move on.
    But these gamblers had political clout. They got their stake back (with interest).
    Which is kind of ok given that many of these people didn’t realise the gamble. Turgon is right, the PCI didn’t spell out that this was no better than the 2.30 at Newmarket to its stakeholders, and when the favourite got beat they ran for cover.
    Wonder how many sermons this Sunday will be on the evils of gambling?

  • sonofstrongbow

    CharlieMcCarthy29,

    “You are entitled to your own opinion, of course”. How charitable of you. I think you for your permission to comment.

  • Mike the First

    Ulick

    Care to justify your statement “Presbyterian property investors (not “savers” by any stretch of the imagination)”?

    Beyond your obvious distress that they’re Protestants, I mean.

  • Eglise en bois

    Turgon, your visceral contempt (hatred?) for PCI is amazing on this issue. At the risk of being accused of playing the man as opposed to the ball, I believe that whatever has happened to cause you to fall out with the PCI has left your judgement seriously impaired on this issue.

    Yes there is much in this whole saga that bears reflection and analysis, but your vitriolic attack on the church’s role and the ultimate effect you predict is thoroughly unworthy.

    For the record many in the pews, who had no money invested in the PMS and some who did, while having Christian and brotherly sympathy for the PMS investors, still believe that they were all adults, knowing what they were doing – and some, the numbers are debateable, but certainly some, were investing to make a fast buck! So when the institution collapsed, not everyone in the pews were either surprised or totally sympathetic.

    They believe, and I agree, the collapse was precipitated by poor management and a run on the Society’s funds, allied to improper regulation. Ultimately none of this was the PCI’s fault! Equally it was not a church administered fund, yes it was encouraged and yes the church had a moral responsibility to sort it out (which it eventually did) but that was it.

    As for the constant “the church should have dipped into its’ funds” argument, this is nonsense. I and thousands of others never contributed to church funds to bail out a badly run investment bank. Likewise, just because it had the name Presbyterian attached to it or because the magazine of my church carried a commercially available ad from the PMS doesn’t make me and my churches funds, jointly liable for the bail out.

    Personally I never particularly cared for the Government’s bail out of the banks centrally and while I like most people am content to see relief being brought to those in need, the hostility towards the church is simply deflection from those who were responsible, the directors and the regulators.

  • CharlieMcCarthy29

    sonofstrongbow,

    Your mild rebuke makes me see that I sounded condescending. I merely wished to say that I didn’t want to get into an argy-bargy.
    Apologies.

  • always remember that the PMS did not fail because of the financial crisis or that it was being improperly run as a bank

    It failed because the lucky ones, rushed to get their money out just in case. the greedy ones, members of the PMS caused a run on the society. It was brought down by its members.

    here’s a wee question!. Assuming all its members were Presbyterian, and assuming Presbyterians are Christians, What were they doing hoarding or saving money in the first place?

    (As JC in the good book tells them not to do so)

  • Drumlins Rock

    ever read the “Parable of the Talents” Procrasnow?

  • nightrider

    It failed because the lucky ones, rushed to get their money out just in case. the greedy ones,

    Probably the clergy.

    It was desperately overexposed to property investment. There was only 1 way to go there. The Chancellor still did the right thing, as his predecessor had bailed out all the Icesavers (Landbanski etc).
    The deal, I think, is that this remains a one-off and doesn’t establish a precedent.

    The simple fact is that it was a gamble. All investment is gambling.

  • Pigeon Toes

    Having heard of some of my childhood neighbours being financially wiped out, and resulted in the selling of homes and land, this is good news.

    We *all* put our trust in various financial institutions and stupidly trust the person in front of us to understand what they are selling…

    If you have any savings or pension, hope you are all content, that is truly ethical and moral 😀