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Presbyterian Mutual Society - the story that will not go away


azogar
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the dirty linen has been aired in this bit

http://news.bbc.co.uk/1/hi/northern_ireland/7748218.stm

but i keep hearing rumors

rock on!

It seems all are equal in the sight of the Lord - the Catholic Church and the Church of Ireland have got burnt on Bank of Ireland shares, according to the Sunday Indo. It's rumoured the catholics may even have to celibate of their property empire.

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The General Secretary of the Presbyterian Church of Ireland certainly did not inspire confidence with his performance - each time he spoke, he made things worse for himself.

I was somewhat disappointed by the programme, however, as I didn't get a real sense as to who made the underlying investment decisions. The programme referred to the Board / Directors and also Trustees. However, my (limited) understanding is that this type of body would usually also appoint investment advisers and / or have a dedicated Investment Committee that would advise upon asset allocation / investment strategies etc.

Also, the impression I was left with from the documentary was that the Society had invested directly in certain commercial properties. That wasn't explicit, but was simply the impression I derived. Given its illiquid nature even in more normal times, I imagine that this would be a somewhat strange strategy for such an organisation.

In conclusion, the programme left me with more questions than answers. In particular, I'm curious as to the investment strategies employed by other relatively small mutual societies in recent years and, in particular, whether the Presbyterian Mutual Society has been caught out due to a more aggressive investment stance than was the norm amongst these types of societies or whether this is likely to be just one of many societies in similar difficult circumstances.

Edited by Ulidia
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The General Secretary of the Presbyterian Church of Ireland certainly did not inspire confidence with his performance - each time he spoke, he made things worse for himself.

I was somewhat disappointed by the programme, however, as I didn't get a real sense as to who made the underlying investment decisions. The programme referred to the Board / Directors and also Trustees. However, my (limited) understanding is that this type of body would usually also appoint investment advisers and / or have a dedicated Investment Committee that would advise upon asset allocation / investment strategies etc.

Also, the impression I was left with from the documentary was that the Society had invested directly in certain commercial properties. That wasn't explicit, but was simply the impression I derived. Given its illiquid nature even in more normal times, I imagine that this would be a somewhat strange strategy for such an organisation.

In conclusion, the programme left me with more questions than answers. In particular, I'm curious as to the investment strategies employed by other relatively small mutual societies in recent years and, in particular, whether the Presbyterian Mutual Society has been caught out due to a more aggressive investment stance than was the norm amongst these types of societies or whether this is likely to be just one of many societies in similar difficult circumstances.

A very sorry tale for all concerned, on BBC radio last night they said other insitutions such as credit unions are also not covered by the government.

Is this correct ?

Anyone any information on their and other mutuals workings ?

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A very sorry tale for all concerned, on BBC radio last night they said other insitutions such as credit unions are also not covered by the government.

Is this correct ?

The government-introduced £50k guarantee definately applies to Credit Unions. There was probably some confusion as the Credit Union movement has its own underlying guarantee system that is independent of the deposit guarantee scheme employed by the banking industry. Similarly, in Rep of Ireland, where Credit Unions are very popular and represent an immensely strong lobbying movement, the Credit Unions are now protected by the Dublin Govt's guarantee.

The Credit Union movement across Ireland (i.e. Ulster Federation of Credit Unions and the much larger Irish League of Credit Unions) had been actively lobbying the RoI and NI governments for greater powers i.e. more flexibility as to how to invest members' fund and the ability to introduce a wider and more sophisticated range of products, to include mortgages. I am assuming these initiatives have been stopped in their tracks due to recent events.

Edited by Ulidia
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The government-introduced £50k guarantee definately applies to Credit Unions. There was probably some confusion as the Credit Union movement has its own underlying guarantee system that is independent of the deposit guarantee scheme employed by the banking industry. Similarly, in Rep of Ireland, where Credit Unions are very popular and represent an immensely strong lobbying movement, the Credit Unions are now protected by the Dublin Govt's guarantee.

The Credit Union movement across Ireland (i.e. Ulster Federation of Credit Unions and the much larger Irish League of Credit Unions) had been actively lobbying the RoI and NI governments for greater powers i.e. more flexibility as to how to invest members' fund and the ability to introduce a wider and more sophisticated range of products, to include mortgages. I am assuming these initiatives have been stopped in their tracks due to recent events.

http://www.creditunion.ie/Default.aspx?p=1...n=111&a=175

Did a bit more reading , CU's seem very secure.

Was the PMS a fairly unique fund ? From the program it seemed a very strange set up.

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A very sorry tale for all concerned, on BBC radio last night they said other insitutions such as credit unions are also not covered by the government.

Is this correct ?

Anyone any information on their and other mutuals workings ?

Credit Unions are covered. A few of them have gone down this year, and the FSCS has / is paying out on them up to the £50,000 limit. Generally nobody is anywhere near the limit so they all get paid in full, but they have to wait a few months for the money.

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  • 1 year later...

Savers in the crisis-hit Presbyterian Mutual Society are victims of a "pass the parcel" exercise by the Government, an MP has claimed.

John McFall, who chairs the Westminster Treasury Select committee, led a session of the committee at the Assembly where he grilled politicians on whether enough was being done to solve the crisis.

Mr McFall also met Presbyterian Church moderator Dr Stafford Carson and heard from savers who may lose their life savings because of the collapse of the society, which was not covered by the government savings guarantee brought in as a result of the financial crisis.

With the society now under administration, a bank is being sought to take it over and Stormont ministers are lobbying central Government to help its customers.

Mr McFall, quizzing Assembly ministers Arlene Foster and Sammy Wilson, asked if the political will existed to solve the problem as quickly as possible.

"Where is the political will in this?" he said.

"There should be a political will between Westminster and yourselves to try and fill this gap, to give reassurance to banks or others to come in to get this over with, rather than what some people would say is a pass-the-parcel exercise at the moment.

"There is a feeling from people that they have been forgotten about. This matter is going on for months and months and months."

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i note that those who like to pontificate from their pulpits

ran shy from giving their answers in public today!

http://www.newsletter.co.uk/news/Committee-hears-PMS-savers39-plight.5989955.jp

rock on!

from article......

However, the Presbyterian delegation met the select committee behind closed doors before everyone else gives evidence in public.

.../...

A spokesman for the Presbyterian Church could not say why its leaders would speak in private.

There was much anger against the church when PMS savers felt it distanced itself from their plight by emphasising its legal isolation from the £300m mutual over a year ago, after it suffered a run.

After the committee closed its session, acting First Minister Arlene Foster met with the church delegation to discuss progress with rescue plans for the PMS.

Hmm, could it be that they know who the likely candidate for the takeover is but want to keep it under wraps for now?

Otherwise, why the hush-hush?

methinks we have not heard the end of this yet

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Reading William Crawley's blog again...

It begs the question whether the Presbyterian Church's (PCI) relationship with the PMS and the later distancing of this association could possibly be the subject of legal action should the savers (hmm, investors?) not be compensated as the final outcome.

This distinction between savers (e.g. money held on deposit in a bank) and 'savers' with a mutual society where the funds were used in investment (not subject to the FSA deposit guarantee scheme), will surely be where any possible legal action occurs if there is not full compensation; e.g. along the lines of...

I was told my money was safe and i was led to believe i was 'saving'*

Yet, if there is full compensation, then surely this will evoke other action as this would be a 'test-case'?

I haven't been following this story for a while nor is my knowledge of the legalities here any more than the next man/woman, but there are many questions raised.

edit - *This is speculation on my behalf as I am unaware of the full facts or legalities but having read the linked blog this is partly the impression I gather

+ other editing

Edited by p.p.
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  • 5 weeks later...

anybody here arlene on the radio this morning

peter not happy either

http://newsvote.bbc.co.uk/1/hi/northern_ireland/8522021.stm

classic dont like the message

shoot the delivery boy

rock on!

Heard Arlene on Good Morning Ulster this morning. She was somewhat robust and combative. Hell hath no fury .....

Interesting to hear the different tone adopted by the Presbyterian Moderator interviewed later at about 8.35am. He welcomed the report, accepted that a degree of the blame lay within his church and said it was now time to resolve the matter.

Will have to listen again on the Beeb website tonight - AF was seriously angry.

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  • 6 months later...

Interesting comments, not sure I agree with the religious exclusion being a reason tax payers should not bail them out. He barely touches on the issue that many were claiming they where just 'saving'. I guess its possible they don't want to blame the church, but either someone is to blame for miselling/misrepresentation or they understood the risked. If they want bailed out I would suggest they need to accept it was missold to them and point the finger/Sue or accept they gambled and lost.

There was alot of it (mis-selling) about, my partner went to open a ISA savings account and asked for a simple basic ISA in the bank, she went for what was recommended. After several years of losing money and then making some back I suggested she should get out of it (2008). I was surprised that the account was linked to the stock market but assumed all ISAs where like this. When she went to close the account, she said she didn't like the idea that there was risk attached to it and was immediately offered a 'Cash ISA', she angrily replied 'THATS WHAT I ASKED FOR IN THE FIRST PLACE', apparently the bank managers face was 'a picture'. Needless to say she didn't accept the offer and put the money towards paying off the mortgage instead.

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  • 2 months later...
  • 5 years later...
Moore Stephens: Accountants who audited Presbyterian Mutual Society are fined £140,000

http://www.bbc.co.uk/news/uk-northern-ireland-35706717

The accountancy firm which audited the Presbyterian Mutual Society (PMS) has been fined £140,000. The PMS had to be bailed out by the government in 2010 after savers rushed to withdraw money. The Financial Reporting Council (FRC) found accountants Moore Stephens failed to obtain an adequate understanding of the legal and regulatory environment in which the PMS operated.

Moore Stephens audit partner, David McClean, was also fined £20,000.

The FRC said the firm and audit partner failed to adequately test PMS board and management assumptions that it was complying with its own rules and with legislation and regulation.

It added that the firm also failed to apply professional scepticism and to obtain sufficient audit evidence to corroborate assurances and representations provided by management.

The Department of Enterprise (DETI) bailed the PMS out with £225m of loans.

Annual instalments are due to repay £175m over 10 years, with the £50m balance being paid when the society is wound up.

The society could only make half of its scheduled loan repayments in the last two years.

This does not alter the requirement on the society for the full repayment of the loan.

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  • 2 years later...

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