CII/PFS: Which way forward as consultation deadline looms?

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CII/PFS: Which way forward as consultation deadline looms?
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When the Chartered Insurance Institute earlier this year tried to de-register the Personal Finance Society for the third time, objections to the proposals – previously voted down twice – would have come as no surprise.

But the groundswell of feeling against this third attempt was such that it drove former PFS presidents Robert Reid, Carole Nicholls, Brian Steeples and Sharon Sutton to come together and set up a lobby group called Our PFS.

The group also launched a website to vote against specific CII resolutions.

The PFS itself has said that: “In the light of the CII board’s attempt to de-register the company, the status quo is no longer an option and welcomes the implicit recognition of this” in the CII's ‘Shaping the future together’ consultation document. 

So, what will be the way forward for the CII and the PFS, following the outcome of this consultation, which ends Friday December 17?

Deepening tensions

The consultation, launched following the CII’s annual management meeting in June, wants the views of members on their current relationship with the CII and with their societies, including the PFS, as well as their ideas on how the CII can best support all communities over the next five years.

But the raft of concerns that have been raised by the PFS, past PFS presidents and the wider adviser community about the CII’s approach over the past five years has deepened tensions.

Among them is the manner in which the CII’s historical home, The Aldermanbury was sold, which the chartered body said was done to cover the DB pension scheme deficit and because the building was not viable to repair.

Another criticism levelled at the CII is that its education offering, including the qualification framework and pathways, has not kept pace with the needs of the profession.          

Last month, the chartered body also experienced further exam glitches as candidates were unable to view their results and certificates online. 

It follows on from several instances, this year and last, of technical issues on its exam site and problems with accessing remote invigilation sessions and technical issues during sittings. 

Many are also worried about the state of CII’s finances.

FTAdviser previously reported that Robin Melley, founder of Matrix Capital and former chartered ambassador at the PFS, who has examined the CII’s annual accounts, noted that its net asset position had dropped over the years from £25.8m in 2016 to £16.8m in 2020. 

And while the wider CII group's assets have only fallen from £38.7m to £34.3m over the same time frame, the institute's liabilities remain relatively high.

The accounts show that liabilities in 2020 amounted to £27.6m, a chunk of which was owed to the PFS, leading some to speculate that if the PFS were to be de-registered, the debt burden on its 'parent' would be eased. 

Likewise, the PFS's accounts show the amount owed by 'parent' undertakings was £16.3m.

Melley, who is also the vice-president of the Insurance Institute for Shropshire and mid-Wales, adds: “Since the publication of the CII’s accounts in June 2021, members, local insurance institutes and other groups have been raising concerns over repeated poor performance, bad decision-making and fears that the financial position was weakening. 

“Instead of transparency and accountability, we have seen attempts by the CII executives and board to mask the evident waste of CII reserves and to cover up failures of the five-year manifesto and operational issues, claiming victory and success for themselves instead.”

De-registration objections

Phil Billingham, director at Perceptive Planning and a former director and subsequent vice-chairman of the Society of Financial Advisers, now the PFS, says: “The PFS members I speak to [who are engaged] are unhappy with the current system, which is in effect taxation without representation. In short, we produce the profit, but have no say on what purpose that profit is applied to.”

When it comes to its education offering, the CII has previously said its consultation proposes a number of improvements to its education offering, while Sian Fisher, who is stepping down as CII chief executive next year, said work is underway to update the systems following the exam glitches.

But the most controversial of issues with the CII, that has also dented its image within the financial advisory sector, has been its repeated plans to de-register the PFS, seen as a move to subsume the PFS into the CII, thereby drastically reducing its significance and powers.

It is widely believed that reducing the CII’s debt burden is the driving force behind the de-registration plan, but this has been denied by the chartered body.

Melley says: “Attempts to de-register the PFS are viewed by the majority as a brazen attempt to grab PFS cash reserves to prop up the CII’s ailing position. 

Robert Reid, a former PFS president basing his analysis on publicly available information, says: “Given the significant losses they have incurred in the recent past and the growth in the loan – in the 2020 accounts stated as [£16.7m] from PFS to CII – plus the absence of any details with regard to the terms of the loan, folding the PFS into the CII may be a convenient way to remove the need to repay the loan from the CII’s perspective.

"No other reasons have been offered other than some references to savings.”

At the June AGM, Fisher said the CII “never intended de-registration to be confused with wishing to disband the PFS” and apologised that plans had not been well communicated.

But advisers say they still feel the CII has not provided enough detail on how de-registration will affect the powers and independence of the PFS board.

Our PFS

Reid, Melley and others continue to call for an independent financial strategic review of the CII’s manifesto over the past five years, adding that it should have been carried out before the consultation.

Our PFS, the lobby group, says it will continue to press for change and will provide support to the PFS board.

Reid adds: “We need to establish the financial and constitutional position of the PFS and that must be done by independent consultants with a clear brief from the boards and groups such as ours having proper input.

“If the key information is not forthcoming soon, this could ultimately damage the future of both the CII and the PFS.

“An independent financial and strategic review is what we have been asking for all along. The consultation doesn’t deliver that, so we hope that the PFS board may be able to.”

But Fisher says: “Some clear themes emerged in the first few weeks of the ‘Shaping the future together’ consultation.

"Financial planners who have attended events, or completed the consultation survey, have shared they want the CII to do even more to help make the profession an attractive career choice, as well as to drive deeper engagement between the profession and the wider public, the government and regulatory bodies."

She adds: "The consultation also directly addresses the relationship between the PFS and the CII and we continue to encourage everyone to engage with the consultation before it closes.

"We exist to support all our members and we want to hear their views about the future, the services that will best support the vital work of financial planning professionals across the UK, and we will use this invaluable insight to shape the CII’s strategic direction in 2022 and beyond.”

Winning back hearts and minds

The CII might hope that the consultation is a step towards winning back the fast-dwindling confidence of financial advisers, but it may have a battle on its hands.

Billingham says that if enough members lose confidence, a separate body – be it the current body continuing as an independent entity or a ‘newco’ – becomes “pretty inevitable”.

He adds: “The danger for the CII is that their actions could be seen as radicalising this ‘silent majority’ to the point of making revolution inevitable.” 

In a statement, the Shropshire local institute says: “If we step away from the many poor decisions and deteriorating performance and standards of the CII over the past five years that appear to have caused harm, our overriding concern is one of lack of trust and confidence.”

Melley says: “The CII never really had the confidence of advisers. It’s the PFS as the main professional membership body that has built confidence and trust, especially since 2013 in a post-Retail Distribution Review world.

"The CII has always been the provider of exams but sadly today it has slipped behind in its core area of purpose and leaves an opening for others to fill the void.

But the overriding feeling among advisers is disappointment that something good has seemingly gone wrong.

Melley adds: “We all want the CII to extract itself from the awful mess that it has got itself into over the past five years that has put the CII itself in jeopardy and has, by association, placed the local insurance institutes and the PFS in a precarious position.

“In essence, we all want to see the CII ‘build back better’, but before it can do that we need to know what went wrong.”

Ima Jackson-Obot is deputy features editor of FTAdviser