Statement by TUV Leader Jim Allister QC

“Yesterday in robustly probing why the gap in regulation of PMS was allowed to persist, Treasury Committee Chairman, John McFall, put his finger on why Government cannot evade responsibility for the losses of PMS savers. The DETI Minister’s unconvincing responses came no where near answering why her Department, with knowledge of the absence of regulation, did nothing to block the gap. If that gap, long known to DETI  – and which was directly drawn to DETI’s attention by the Registrar at page 1 of his 2007/08 report to the Minister – had been addressed, then this sorry saga would not have evolved.

“That report expressly pointed out that the Registrar has responsibility for “the effective prudential supervision of credit unions”, but goes on to highlight that “The Registry does not exercise any prudential supervisory role in relation to industrial and provident societies.”

“I have repeatedly drawn attention to this issue. On 14 August 2009 I said of this report:

 “Since this report is specifically prepared for the Minister, here we have the Minister put on notice of the absence of prudential supervision, which is a gap in adequate control mechanisms that required to be filled. Yet, no departmental action flowed. Indeed, the scale of the issue was further highlighted by the fact that the same report showed that the assets of Industrial and Provident Societies in 2007 was £851m, comparable to the £860m assets of the properly supervised Credit Union sector. Here we have huge assets in excess of £850m in each sector, one is supervised, the other is not, a common Registrar exists for both, but in the case of only one is he vested with prudential supervisory powers; the Registrar points this out and the Minister and Department do nothing! And this, even though as far back as 2004 the Treasury had published a consultative document on regulatory issues for Industrial and Provident Societies.

“The failure of DETI to enact supervision of Industrial and Provident Societies over the years was, in my view, negligent, particularly given the known scale of funds involved and the parallel supervision which existed under the same legislation for credit unions. Why were £850m of Credit Union funds thought worthy of supervision but £850m of Industrial and Provident funds ignored? Herein, is rooted culpability on the part of the government. It is equivalent to the FSA regulating Banks, but ignoring Building Societies.

"Thus, I again call on the government to face up to its responsibilities in this sorry PMS saga.”

“I trust that now John McFall has put the focus on DETI’s failings that, at last, they will face up to their responsibility and desist from what Mr McFall characterized as ‘passing the parcel’. 

“This matter has dragged on far too long already. Now government, both local and national, must grasp the nettle and bring an end to the suffering of PMS savers.”