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Patience, Prayer and the PMS

January 16th, 2010

the-presbyterian-mutual-societyBefore Christmas, I asked PMS savers to be patient and prayerful. We have now reached the middle of January and still there is no resolution of the situation. We remain patient and prayerful. My own elders in First Portadown had a special time of prayer for the PMS situation last Sunday. The whole process of resolving this situation seems to be scandalously slow.

On Monday I will be at Stormont with other representatives of PCI to see Mr John McFall, chairman of the Treasury Select Committee, who, along with members of his committee, will be here on a fact-finding mission. We also hope to meet with some of our local politicians to continue to press the issue. Some PMS savers will also have the opportunity to speak with the committee.

This is what we will be saying to Mr McFall and the Treasury Select Committee.

The case for the PMS savers is very simple. They are the only savers in a distressed financial institution in the UK who, during the worst post World War II recession, have been denied access to their savings for nearly 15 months. It has been the Government’s proud boast that “throughout this whole crisis, everyone that has been saving in a UK institution has been protected whenever there has been a difficulty in that institution”. That has been so regardless of the culpability attaching to the institution for its failure.

If the other distressed institutions which the Government has bailed out, with their millions of savers, had been dealt with as the PMS has been, the country would simply have been ungovernable and the economy would have collapsed. It is a monstrous injustice that a small group of savers (some 10,000) in this part of the UK should be treated differently from the great mass of their peers.

For six months the Government took no interest in the matter. Under pressure, it conceded in June that a Working Group should be set up, to report to the Prime Minister in September. Seven months on, it has still not reported. The tardiness of the process is wholly unacceptable. PMS savers have displayed remarkable patience.

The delay also creates difficulties for the Administrator, who has recently made application to the courts for advice on various matters, including the basis on which he should make the initial distribution which he now proposes. This brings to the fore the issue of the status of loans and shares. Throughout the existence of the PMS, members’ loan capital and share capital were treated equally, with no priority between them when the Society made distributions. A (presumably unintended) consequence of Administration under insolvency law was to introduce a hitherto unknown and artificial distinction between them. Any interim distribution or, still worse, any ultimate resolution of the PMS’s difficulties which reversed the founding principle of mutuality and discriminated against the smaller savers would not only be a grossly unfair but also a hugely divisive outcome for Presbyterian congregations. The Church has made clear throughout to the Government the need for urgent resolution in order to pre-empt these problems. The Government appears not to take this seriously.

The only solution which can produce (at least cost to Government) the same outcome as was achieved for other savers in the UK (and, indeed, the Republic of Ireland), is for the assets and liabilities of the PMS to be absorbed by a substantial existing financial institution. The Church made a proposal to this effect to the Working Group early in August.

The Government was extremely dilatory in adopting the proposal and then in pursuing it, bearing in mind the remarkable expedition with which it rescued the UK’s biggest financial institutions. We would have expected Government to call in the Heads of appropriate financial institutions, to indicate to them Government’s unequivocal desire to put PMS savers into the same position as their peers elsewhere in the UK, and to seek a partnership with one or more of the institutions for that purpose. Instead, the Working Group has instituted a process with the financial sector which has dragged on for months in a manner wholly out of keeping with the urgency of the situation. We have drawn our acute concerns about this to the attention of the Secretary of State in a letter just before Christmas. Anything the Committee can do to induce the Government to conclude with the utmost urgency an arrangement with a financial institution which achieves the outcome set out as described above would be greatly appreciated.

Please pray that our pleas will not fall on deaf ears, but that even yet our prayers may be answered and that we may have reason to be thankful for a successful conclusion to this whole saga.

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