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) 

The Personal Finance Society board will meet early in the New Year to discuss a formal response to intervention in its running by parent body the Chartered Insurance Institute.

Debbie Mitchell, PFS member and CII group board member, writes exclusively for Financial Planning Today on why she believes the CII group board decision to intervene at the Personal Finance Society, and effectively take control of the PFS board, is the right one. 

If you’re surprised to learn that a PFS member sits on the CII Board, then hold on to your hat – there are three of us! Three PFS members, each of whom has been deeply concerned about the governance failings of the PFS board over recent months.

I’ve been reading the views of other PFS members since the announcement and I’m disappointed that some of my fellow professionals are turning to conspiracy theories and myths rather than considering the facts. Simply put, the CII Group Board has called out poor behaviour and governance on the PFS Board.

The list of failings is sadly long: 

• a failure to act in line with the Articles of Association approved by PFS members;
• a lack of collective decision making by the PFS board;
• the exclusion of Institute-appointed directors from PFS board meetings and decision-making processes;
• the inappropriate establishment of at least one sub-committee, which is directing work without proper authority from the PFS board or input from the CII as required under the PFS board’s Terms of Reference.
• a group of PFS board members pursuing actions without full board authority that have led to significant expenditure on external advisors that is substantially above agreed limits;
• the PFS board seeking to exclude the CII Group Audit and Risk Committee from oversight of audit and financial statements;
• the PFS board reappointing expired board members by co-option rather than rotating the membership of the board.

Faced with the evidence, which I have scrutinised, it would have been a dereliction of my duty not to act with my fellow CII board members.

These are the sorts of failures that I am convinced the three Institute Directors joining the PFS board will help address.

And they are not there to run rough-shod over the existing members, who have always shown great passion and commitment to their profession. Suggestions of that nature are a slight on their character, professionalism, expertise and experience.

Yes, they are Institute appointed, but – just like me – they are of their own mind and I am sure will rapidly address the CII board’s concerns, and I hope now yours.

I’ve also seen a lot of myths being peddled in recent days. Like, the CII board is doing this to deregister the PFS. It is not. Or that the PFS can exist without the CII Group. It can’t. Or that this is just a cash-grab. Nope. PFS assets will continue to be used to serve PFS members, as has always been the case.

So, I’m appealing to my fellow PFS members to take a moment over Christmas. A moment of reflection brought by happier times, with friends and family, to consider the necessity for the right sort of change.

I strongly believe the CII Group of companies is a family too, and we can employ our high professional standards to work through this next period to a 2023 that sees good PFS board governance restored and the PFS thrive once again.

Debbie Mitchell is a PFS member and CII group board member. She is the owner of IFA firm Atholl Scott Financial Services in Aberdeen.

The Personal Finance Society has blamed a lack of CII directors attending for its decision to abandon an Emergency PFS board meeting today.