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Presbyterian Mutual Society

Thank you, Sir Nicholas. It is always a privilege to serve under your chairmanship, and it is always a pleasure as well. I want to pay tribute to the humanity and kindness that you have shown to many hon. Members, and to your constant good humour. I have never known you to have a bad day or look remotely miserable; perhaps the hon. Member for Congleton (Ann Winterton) could advise me differently, but I have certainly not experienced it in the House. I also congratulate the hon. Member for South Antrim (Dr. McCrea), who introduced this important debate. Hon. Members have spoken from their personal and local experience, and I do not want to trespass on that, other than to make a few brief and general remarks. This is a sorry state of affairs. The 10,000 members of the Presbyterian mutual society have become victims of that society. Obviously, one contributing factor to that was poor lending behaviour and unauthorised activities, which was all part of the age of profligacy, and we must acknowledge the poor decision making by executives of the PMS. However, many people who have suffered from such decision making have been bailed out, including bankers themselves. Members of the PMS are particularly unfortunate because the PMS is not a bank. It is not covered by the Financial Services Authority and therefore there has been no bail-out. There is not yet any satisfactory regulatory structure for mutual societies, although an excellent private Member's Bill, which I played some part in, is going through the Commons and will deal with that problem to some extent, although only in a retrospective way. As with Equitable Life, there is an issue of regulatory failure. As the Treasury Committee stated, no reasonable person, and none of the members of the society, could have supposed that such errant behaviour would have been allowed. There is a feeling, which seems to be manifest in what hon. Members have said, that all the organisations that ought to have worked on behalf of members of the PMS have to some extent let them down or washed their hands of the issue. The FSA does not think that it was its responsibility to have done otherwise, and the Treasury Committee points the finger at the Department of Enterprise, Trade and Investment in Northern Ireland. It does, however, recognise that although that Department might have had the knowledge to act, it had no legal power. Furthermore, even the Department of Enterprise, Trade and Investment could not have anticipated the effect that Government guarantees to other banks would have had on the PMS, and that view has been stated by the directors of the PMS. To members of the PMS—the sufferers in this case—it can seem that blame is a pass-the-parcel kind of affair. The PMS is faced with £20 million of assets, when the original assets were £300 million, and the organisation is in administration. Members of the PMS seem sadly caught by the semantics of the situation. They are unprotected because they are classified as investors rather than savers, and they stand at the back of the queue because, according to the courts, they are lenders and not creditors. I am sure that that is no comfort to them whatsoever as their situation is pretty grim. There are no interim payments in prospect, and they are not first in the queue for claims. There is no date for when administration must finish, and no clear idea of how it will finish—it could go on for years. Those people are a sad casualty, but normally that would be mitigated a little by the fact that in all investment there is a hazard and a fair risk. However, the Treasury Committee made clear its view that there was no rational reason why members of the PMS should have suspected that the organisation would get into such a plight, and there was no obvious in way in which they could have found out about it. There was a general presumption that, since the society was backed by the Presbyterian Church, the most prudential ethics would have applied. To cut to the quick, the hon. Member for South Antrim talked about this being the time for real positive solutions. There seem to be four possible solutions. One is to rely on existing procedures such as administration and the courts in order to work a way out. However, on objective examination, it seems that the levers are simply not there to resolve the situation in a timely and effective way. Another solution that has been alluded to would be to wait for another company to step in, or for something to turn up—a kind of Mr. Micawber solution. The retrospective solution is obviously to ensure that such things never happen again, and I think that we will do that, although that is retrospective. The fourth solution, which appears to be the burden of the debate, is to call on the Government to be "innovative"—that was the word used by the hon. Gentleman—and to take some ad hoc Executive action to ameliorate the situation of the principal sufferers in these sad events.