Mutual to benefit from £50m loan

THE NORTH’S Executive has signalled its intention to provide a loan of £50 million to help create a hardship fund for people who were members of the failed Presbyterian Mutual Society (PMS).

The proposed fund is one of a number of approaches being explored by the Northern Ireland Executive to the problems created by the collapse of the PMS.

The society, which was not regulated by the UK’s Financial Services Authority, was forced into administration in November 2008 following a run on its funds. At the time its assets were estimated to be in the region of £300 million.

The failure of the PMS, whose membership was exclusive to members of the Presbyterian Church of Ireland, has left many small investors and savers who are elderly in dire financial difficulties.

A recent High Court ruling in Northern Ireland also found that any PMS member who had less than £20,000 in the society could not be classified as a creditor. This means small savers and investors would not receive any money from the administrator of the PMS until creditors have been paid in full.

The latest proposals from the Executive represent the most significant effort to date to find a way forward to help former members.

The Executive said it anticipated the fund would be administered by a panel. It would consider applications from members and then award payments based on specific circumstances. The Executive is also proposing to provide a loan of £175 million to the administrator of the society.

Under the terms of the loan the administrator would operate under the auspices of the courts to discharge the liabilities of the PMS creditors, replacing their liabilities with the liability of the loan.

Repayment of the loan would be generated through the rental revenues received from society properties, other incomes, and the sale of property owned by the PMS as the property market improves.

All proposals are contingent on due diligence and approval by the UK Treasury to extend an existing borrowing arrangement under the Reinvestment and Reform Initiative in the North.