MR SHAUN WOODWARD MP, MS HILARY JACKSON AND MR NICK PERRY

1 APRIL 2009

  Q40  Lady Hermon: My questions?

  Mr Woodward: No, I said some questions—yours never mislead people.

  Q41  Lady Hermon: Thank you, Secretary of State.

  Mr Woodward: It is important to get on the record that there is a huge distinction between what has happened to Dunfermline and Presbyterian Mutual for one very important reason—Dunfermline is a building society; Dunfermline is a building society which is regulated by the FSA and as such it has paid into the industry insurance scheme. The problem with Presbyterian Mutual is that it is not a building society; it was not regulated by the FSA and as such, therefore, did not pay into the insurance scheme. Those distinctions actually mean that the comparisons that get made—it has been done for this but it has not been done for that, and that is what I meant about misleading—allow, as you say, all those old people to feel, "Why is it being done for them but not me?"

  Q42  Lady Hermon: Exactly.

  Mr Woodward: And the answer is that the government created a structure that it was incumbent on those who wished to, to take up—we cannot make the horse go to the water; we can provide the water but it is up to the horse to go. Here is the problem. What we have here is a situation in which because one is in an insurance scheme there is a way through this for people. On the other side, when it comes to Presbyterian Mutual, we have a completely different system here running altogether, so it is basically not apples and apples, it is apples and pears we are comparing. I do not therefore think that the comparison is helpful and I do think that it is potentially misleading because it will lead to people think, "They are getting compensation and we are not and yet we are in the same position"—they are not. That was because of a decision that was made and taken in Northern Ireland to do what they did. Having said that, the FSA is actually conducting an investigation at the moment into how the PMS operated. The Treasury review is going ahead of how all of those organisations, like PMS, have operated and that includes provident societies and credit unions in Northern Ireland. In addition to that, I have arranged with the Prime Minister for Nigel Dobbs to meet with the Chief Secretary, not with a view right now to being able to see what could be done right now because while the FSA investigation goes on there is not anything that anyone can do while the investigation is underway. But I did not want to waste the time of saying that while it is underway we do not need to get on with the exchange of information that needs to take place; and I am not here, Sir Patrick, raising people's hopes falsely. But we need to understand what happened, we need to understand how they ran themselves; we need to understand whether they governed themselves properly; we need to understand whether they took up opportunities to protect those who put money with them, that should have been done. It does mean that it is a different situation again from Equitable Life—so we have apples, pears and oranges and not three sets of apples here again. But please do not confuse the fact that because it is not in any kind of system that we are simply saying we do not care—we do. That is why the Treasury is engaged and I got it to engage six weeks ago.

  Q43  Lady Hermon: Thank you.

  Mr Woodward: That is why we are looking with the FSA at this area and where the FSA is conducting its review because the FSA cares about it. That is why the Prime Minister met at the end of last year with Ian Paisley, why the Prime Minister met with the First and Deputy First Ministers and discussed this issue with them; that is why the Prime Minister and I have continued to discuss this issue. But what I do not want to do is lead those who have lost money in this to conclude that this is comparable to Dunfermline or to Equitable Life because it is not. The question is, would there be something that might be able to be done for them? Let us wait now for the FSA review; let us wait and see where the overall review by the Treasury gets on this and let us see where we are. We are not walking away from them, but equally we have to make sure that we understand where the fault correctly lies here.

  Chairman: Thank you very much for dealing with that and sorry to take you by surprise on that one; but thank you very much for your very full answer. Secretary of State we are grateful to you for your full answers on all the subjects we have raised and we shall look forward to seeing you again on 29 April, when we will be pursuing Eames and Bradley. Thank you to Hilary Jackson and Nick Perry.