The failure of the Presbyterian Mutual Society: sixth report of session 2009-10 report, together with formal minutes, oral and written evidence

House of Commons papers 260 2009-10

Corporate Author:
Great Britain Parliament House of Commons Treasury Committee
Author:
John McFall (chairman)
Publisher:
TSO (The Stationery Office)

This, the 6th report from the Treasury Committee in the 2009-10 session, examines the failure of the Presbyterian Mutual Society (HCP 260, ISBN 9780215544049). The Presbyterian Mutual Society (PMS), a Northern Ireland Industrial and Provident Society (IPS), was subjected to a run on its deposits in October 2008, which resulted in its entering administration. The estimated realisation value of its assets is significantly less than its liabilities. There is some prospect of recovering members' money if the administration is allowed to run for a long time, but that would continue to mean that members of the Society, who might have pressing needs, would not have access to their funds. Moreover, there is legal uncertainty as to whether shareholding members of the Society are entitled to the return of any of their funds until those who have made loans to the Society are repaid. The PMS was not regulated by the FSA, nor was it part of the Financial Services Compensation Scheme. Its members have no legal entitlement to reimbursement. The Committee states that in future a system should exist that deposits were made at the depositors' own risk, and there was no question of government assistance. Further that the directors of the Society should be responsible, not the government or the regulator. Also that the taxpayer should not have to stand behind financial institutions as a general rule. The Committee sets out 18 conclusions and recommendations.

Extent [2], 35, Ev 26p. ISBN 9780215544049
Size N/A Price £13.50
Format Paperback Published 18 Feb 2010
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