The Personal Finance Society has commissioned an independent review of its governance following criticism from parent body the Chartered Insurance Institute.

Don MacIntyre, interim chief executive of the Personal Finance Society, has praised the “passion and strength of feeling” of PFS members following the conclusion today of its member consultation on its dispute with parent body the CII.

Keith Richards is chairman of the Financial Vulnerability Taskforce and former CEO of the Personal Finance Society. He is also a former chief membership officer of the Chartered Insurance Institute. The Personal Finance Society is currently embroiled in a major dispute with parent body the Chartered Insurance Institute about its running and future direction. Here Mr Richards writes exclusively for Financial Planning Today about potential solutions to a bitter dispute.

The Chartered Insurance Institute's (CII) decision to air criticisms of the Personal Finance Society (PFS) Board members in public has shocked and outraged many across retail Financial Services and has shone a spotlight on what many see as unacceptable behaviour while heightening suspicion of financial issues at the Institute. 

Even though there is often no smoke without fire and some of the governance failings listed against the PFS Board may have merit, including the exclusion of the CII in the appointment of an interim PFS CEO which would not have helped matters, it is still hard to reconcile or justify the CII’s actions, especially in light of counter claims. 

The CII’s Royal Charter has a primary objective to secure and justify the public's confidence and trust in its members and the wider market. All the more bizarre, therefore, that the CII Board sanctioned the public criticism of PFS members and in doing so has brought the profession into disrepute. 

The CII brand and reputation has, of course, been under challenge for the past couple of years following various operational and exam failings which have negatively-impacted thousands of students and members throughout that time, both in the UK and internationally. The CII additionally received motions at its last two AGMs calling for an independent review of its controversial decisions, poorly-executed change programme and weakened financial position from the General Insurance membership and Local Insurance Institutes.

I was however particularly saddened to learn very recently that Caroline Stuart, President of the PFS, has suffered ill-health as a result of the CII’s aggressive behaviours and was forced to resign her volunteer position to take time out to recuperate. At a time when the CII should be leading the way on equality and metal health wellbeing, Caroline is a woman who gave her time on a pro-bono basis for her profession and was the first Chartered Paraplanner to be appointed to the prestigious position of PFS President. She was a shining role model and supported the commitment and drive to attract women into our profession and roles of prominence. 

When the CII launched its change programme in November 2016, its prospects for the future were positive. It had a good reputation, strong balance sheet, owned its own heritage head office, had stable and reliable operations, a highly commended customer service centre in South Woodford and a flourishing relationship with the PFS. The future indeed looked bright. Today however, that picture is not so positive with a shattered reputation, weak balance sheet, acting as a sub-tenant renting 50 desks at the Walkie Talkie building in the City of London, challenged operations, no highly commended customer service centre anymore and an explosive relationship with the PFS and membership.

The PFS on the other other hand is a separate company, limited by guarantee and its success during the same period has been down to its independent board, dedicated executive leadership and volunteer regional network. The achievements and initiatives of the PFS are very well documented for anyone to research, especially from 2013 to mid 2021, after which time the narrative by the CII was changed claiming the PFS's success to be due to the CII Board.

While the Personal Finance Society membership of c40,000 may look like the smaller contingent of the CII Group's c125,000 membership, it should be noted that over 60% of CII Group revenue has come from the Personal Finance sector and for this reason alone, suggestions of a separation were never a tenable outcome for the CII and may have hindered mediation. 

Both bodies had complemented each other for over 18 years and there is no reason why that cannot continue, if there is a will to do so on both sides.

There is a way forward and these are some potential solutions:

The situation can be rescued if the CII is prepared to listen and respond to member feedback and work with the PFS Board to find a better route in resolving their respective differences and needs.

Solution 1: The first thing the CII could do is to suspend its aggressive takeover of the PFS to demonstrate it is listening, genuinely cares and wants to consult members in a meaningful way.

Solution 2: Appoint independent mediators (agreed by both sides) as well as a panel of members to observe proceedings between the two boards - openness and transparency is essential to restore confidence and trust. 

Solution 3: Recognise and respect that the PFS had been run independently of the CII Board as a dedicated Professional Membership Body but part of the CII Group - there was never a question by the PFS Board of this position ever changing, even following de-registration attempts by the CII in 2017, 2019, 2021 and should continue to form the basis of a joint solution going forward - as should allowing the PFS to remain independent and member-influenced.

Solution 4: Find a mutually-agreeable solution to transfer PFS financial assets to the CII’s immediate needs, or as and when the CII’s own cash reserves fall below its expenditure limit, to mutually protect both bodies long-term interests and indeed that of its respective memberships.

Solution 5: Neither party should use PR or media campaigns to score points - lessons must be learnt that the PFS Board appears to have had no option but to publicly respond to public criticism they feel is unfounded - joint communications going forward would be best.

Actions speak louder than words - be mindful that actions must be consistent with stated intent or objectives, members are intelligent professionals who expect to be treated accordingly.

The CII has a long and distinguished history and it would be a travesty to see this issue result in longer term detriment when there are options available. The majority of people who have been in touch hope that reconciliation and a mutually-agreeable solution can be found, which satisfies the views and needs of members to ensure the long term benefit for all.

Keith Richards is chairman of the Financial Vulnerability Taskforce but writes here in a personal capacity. E: This email address is being protected from spambots. You need JavaScript enabled to view it. W: www.fvtaskforce.com

Sarah Lord, Immediate Past President of the Personal Finance Society (Sept 2020 to Sept 2022), writes in a personal capacity about her concerns for the future of the Personal Finance Society which is currently embroiled in a major dispute with parent body the Chartered Insurance Institute. Ms Lord is no longer a PFS board member although she remains a co-opted adviser to the PFS board.

I was shocked and appalled by the decision of the Chartered Insurance Institute (CII) on 21 December to add directors to the PFS Board and ultimately seek majority control, however, sadly I was not surprised.

During my 2 years as President of the PFS I received both veiled and explicit threats from the CII on more than one occasion, that they would take steps to “flood” the PFS board, notably in a letter I received in July.

Sadly during my time as President I have witnessed, in my opinion, wholly unprofessional and unnecessary board behaviours from the CII and this latest move is just yet another example.

I and the PFS Member Directors, strongly refute the allegations made by the CII of “serious and significant governance failings.” During my 6 years on the PFS board I can categorically state that all Member Directors have always acted in line with the Articles of Association and have taken their fiduciary responsibilities very seriously.

We have always acted with the utmost integrity and practised good governance, dare I say it, much to the annoyance of the CII.

I would go so far to say that the professionalism and competence of the PFS Board has been a thorn in the side of the CII in recent years. Especially when we’ve been faced with proposals to de-register the PFS and requests for cash, we have diligently and appropriately requested essential information to inform our decision making; and upon receipt of very limited information the PFS Board has been unable to justify supporting the requests from the CII on the basis that we do not believe it to be in the best interests of the PFS and the PFS membership.

It is important that the PFS membership and the CII membership understand that since March 2021, when the PFS was asked by the CII CEO at the time to consider 1) acting as guarantor to a loan the CII was seeking and 2) de-register the PFS, I as President and my fellow Member Directors have worked tirelessly and relentlessly to protect the PFS, the PFS assets and importantly always acting in the best interests of the company and the membership.

Furthermore, it is important to understand, based on legal advice received, citing “governance failings”, is the only way in which the CII could justifiably add additional directors to the PFS Board. Therefore, in my opinion, in seeking to control the PFS they’ve had to claim there are governance failings. There are not governance failings within the PFS Board, this is quite simply, in my opinion, the CII seeking to control the PFS with one aim, to secure the future of the CII.

It is publicly well documented that the CII is in a precarious financial position, the PFS is integral to their future survival, the PFS membership is approximately 30% of the total CII membership contributing approximately 43% of CII group membership revenues. The CII have stated that this is not about the money, I am sorry but it is my strong personal opinion that this is about the money.

It is publicly known that the CII has burnt through the sale proceeds of Aldermanbury (the former CII HQ in the City of London), still have an outlay to Legal & General for the Defined Benefit Pension Scheme and a potentially hefty tax bill from the HMRC waiting in the wings, before you even consider declining membership and exam revenue. You don’t need to be a forensic accountant to work out from the latest set of accounts that the CII is running out of money.

I note that the CII has been very careful in the terminology used when defending the accusations from the PFS membership that it is about the money, specifically Debbie Mitchell (engaged by the CII to represent the PFS members) in her piece on Financial Planning Today stated: “PFS assets will be used to serve the PFS members” and Chris Shadforth has stated “…will not result in cash being moved from PFS to any other company within the Institute’s Group of companies in any way different from now”, careful language in my opinion.

If I was a betting person, which I am not, I would bet that fairly swiftly after forming the majority, the CII will seek to increase the recharge that the PFS pays the CII for the services it provides to the PFS, which in my opinion would be wholly inappropriate; the PFS already pays significantly more than “fair value” for the services it receives particularly given that in recent years the level of service has, again in my opinion, fallen woefully short of what the PFS membership deserves.

I would also hazard a guess that they may seek to justify a transfer of millions back to the CII for the transformation programme, which in my opinion, has so far been a complete failure, the IT infrastructure of the CII lets the PFS membership down.

Financial Planning and advice is a profession in it’s own right, I am sick and tired of hearing “united profession” and “family” from the CII, if we are a family, it is my view, we are at best a family with a dysfunctional parent.

I firmly believe that the PFS Board needs to continue to have majority representation from those that practice in our profession, from Member Directors. It is the only way that the PFS will be able to serve our wonderful profession and in turn the membership serve consumers who now, more than ever due to the cost of living crisis, need financial advice and Financial Planning.

Furthermore, I advocate for the PFS gaining greater autonomy within the CII, it needs its own infrastructure, it is being let down by the services provided by the CII and needs to be resourced from within the PFS if the PFS is going to continue on it’s journey of being the voice for the profession.

I can not and will not support the action taken by the CII Board, and I call upon the PFS membership to unite, speak out and call for the opportunity for open and public dialogue through an EGM.

Sarah Lord is Immediate Past President of the Personal Finance Society (Sept 2020 to Sept 2022)