NI Presbyterian mutual society, Short of funds for withdrawal?

goodbyepci

http://www.ballymenatimes.com/news/First-Minister-meets-Moderator-about.5909665.jp

Toastandbutter

HOPE wrote: »

Crazymess

I do not pretend to be an expert but my understanding is that they were accepting deposits which within PMS Rules is prohibited. Under the Financial Services & Marketing Act 2000 and its predecessor the Banking Act 1987 to accept deposits you need FSA Regulation.

Thanks Hope

but what constitutes a legal definition of taking a deposit?

What did PMS do in relation to "accepting deposits" that wasnt what any I&PS empowered to do under legislation?

Otherwise, what is the purpose of an I&PS? Isnt it to gather money from some folk and lend it out to others for community benefit rather than profit???

Not convinced the PMS has been fairly "convicted" on this point, but interested to hear others...

Could FSA conviction by media be a fig leaf to cover up gaps in regulation?

FSMA section on I&PSs does not appear to apply to NI, only GB.

Toastandbutter

PS ...if the PMS is guilty of taking deposits without regulation..... arent credit unions here too????

HOPE

Toastandbutter wrote: »

PS ...if the PMS is guilty of taking deposits without regulation..... arent credit unions here too????

I find it confusing myself. Obviously there has to be deposits to make it work but as I understand it under the I &P Soc NI Act 1969 those deposits are very small something like £20 if I am correct. Obviously with property developers and large savers etc deposits became very large hence the massive loans. The Credit Unions and there are many of them are also registered with DETI but they have their own compensation schemes in NI.

The PMS had nearly as much money in the last accounts as all the Credit Unions in NI put together. So from that point of view it is clear that the Credit Unions were working on small deposits from savers.

Probably someone with banking or mutual experience could explain exactly what is meant by taking deposits as they are forbidden in the Rule Book. I think size has something to do with it.

Toastandbutter

Hope, think PMS was worth about half the credit union sector....

What if the FSA and treasury know darned rightly that they could not make charges of taking unauthorised deposits stick.... what if that is why they didnt try to make the charges stick?

I doubt very much that size of deposit will be a critical point in confirming it as such.... in any event Mark Durkan made a very good point...

he said the Governmen could not have it both ways... it could not accuse the PMS of taking deposits and then refuse to help because the money was actually investments!!!

Can you see the spin???

A conviction of the PMS by media on the "charge" of taking deposits saves the Government from taking liability for helping the PMS savers and also saves its blushes for not having extended FSMA to NI as it should have, to ensure the PMS was being properly regulated.

Toastandbutter

I honestly hope the PMS working group does not turn out to have been a "Yes Minister" stalling committee...

Toastandbutter

Mark Durkan said;-

"The Government cannot have it both ways. They cannot, on the one hand, cite Financial Services Authority concerns that money was being taken in the form of deposits, because that is essentially the business of banking, and, on the other hand, indict the savers as though they were investors."

Toastandbutter

Take note of FSA's refusal to deny Trimble's claim;-


http://www.newsletter.co.uk/news/Government-admits-to-PMS-regulation.5343753.jp

Government admits to PMS regulation 'issues'





Published Date: 08 June 2009





THE UK Government has admitted that there are "issues" with regulation of institutions like the troubled Presbyterian Mutual Society (PMS) and that there are "lessons to be learned for the future".
The information is significant, because the Government has up until now rejected any responsibility for the current crisis, saying the PMS directors were operating beyond their remit and had strayed into offering banking services.

Secretary of State Shaun Woodward made the latest admission about shortcomings in regulation during Northern Ireland question time in the House of Commons on Wednesday. Lord Trimble, a former senior law lecturer at Queens University, has also affirmed to the News Letter that the Government has tacitly admitted a regulatory failure.

Mr Woodward told the commons this week: "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."

HM Treasury has been carrying out an investigation into regulation surrounding the PMS for some six months. An interim report was due at the budget, but has not yet been published. At a meeting of First Ministers to tackle the credit crunch some months ago, Gordon Brown agreed to meet Peter Robinson and Martin McGuinness about the PMS but he said he would only do so when the Treasury had completed its investigation. However it is understood that this precondition has now been set aside for the meeting on 17 June.

Some observers have queried whether the Prime Minister might have relented because the report would show government regulation to have failed the PMS, and thus put him in a very weak negotiating position. Lord Trimble had gone on record before Wednesday to say there had been a regulatory failure.

In a letter, he told the News Letter that the crisis would not have happened in England because of " administrative procedures" rather than law.

In England the registrar for Industrial and Provident Societies is the FSA, he said. If the PMS had evolved in England, the FSA would therefore quickly advised it that it needed to register as a bank, he said.

A source close to the PMS directors told the News Letter that neither DETI nor the FSA ever suggested it needed to register as a bank.

Lord Trimble noted that the FSA investigation found the PMS was offering financial services but that it decided to take no further action against the directors. "I read into this a tacit admission that there had been a regulatory failure on the part of DETI or FSA or both," he said.

He also said the Government had ensured that societies like the PMS were tied to the FSA in England but had " failed to achieve that object concerning Northern Ireland".

A spokesman for the FSA did not deny Lord Trimble's claims. " Any Industrial and Provident society regulated with the FSA in Great Britain has an obligation to send annual accounts to us on an annual basis," he said.

HOPE

Toastandbutter - Thanks for very useful posts. I actually meant to say that I & PS's and Credit Unions had similiar sums deposited. (not PMS on its own)

I agree that a lot of what has been said is govt spin.

Lord Trimble hit the nail on the head as did Mark Durkan.

At no time did DETI upon receipt of accounts advise the PMS that it should have brought itself within the ambit of the FSA despite the accounts being prepared and submitted. DETI say they have no prudential supervisory responsibility but they have a duty to return acounts that are not properly completed - is that not supervision? DETI contend it was for the Directors to seek FSA authorisation. Shift the blame why don't they.

I suppose we will never know whether DETI or the FSA looked at this to co ordinate it and ensure proper regulation. One thing for sure neither Stormont or London will hold their hands up. If the PMS were offering financial services as alleged by the FSA and decided to take no action is this because DETI or the FSA or both were guilty of regulatory failures ??

The regulatory scheme was devised by the Government - It failed them and us.

Toastandbutter

cheers Hope

I understand credit union regulation is being quietly upgraded to bring it in line with GB....