CII: PFS statement was 'another contravention of board confidentiality'

Earlier this week, the CII announced its intention to appoint a majority of directors to the PFS, following failed mediation attempts.

Alongside this, the CII also announced its decision to appoint three institute directors to the PFS board with immediate effect.

Following this, PFS members came together to hold an emergency general meeting yesterday but were unable to go ahead.

Caroline Stuart, president of the PFS, said: “As stated yesterday, the PFS was scheduled to hold an emergency board meeting today following receipt yesterday morning of the CII’s notice of its intention to appoint three institute directors to equalise the PFS board with immediate effect, and its further intention to appoint a majority of directors to the PFS board. 

“This intention would mean the CII gains indirect control over the PFS board and PFS assets. 

 I have noted the comments of my fellow members that to do this on the eve of the Christmas holidays is cynical and designed to disadvantage the PFS and its members. Vanessa Barnes, Hannay Wealth LLP

“Despite the presence of all of the member directors, and sufficient for a quorum, the meeting was rendered inquorate due to insufficient CII appointed directors attending to make a quorum.”

Stuart said she is seeking to rearrange this emergency meeting of the PFS board as an urgent priority.

Yet, a CII spokesperson, said: “The newly appointed institute directors have all confirmed they can attend the scheduled PFS board meeting in January, and provided their availability for several different dates, should the PFS board want to meet. 

“However, sadly, the statement issued by the president of the PFS board today was another contravention of board confidentiality. We have written to the president of the PFS board to express our concern.”

Meanwhile, Sarah Lord, president of the PFS from 2020 to 2022, told FTAdviser that there have been repeated attempts by the CII under the last permanent CEO and now Alan Vallance to "squash the PFS, roll-it into the CII and secure its assets and reserves to prop up the CII". 

She said: "As I said at the PFS AGM in September of this year, we have sought to block these actions and to act in the best interests of PFS members and the organisation as a whole, as was our duty as directors of a company limited by Guarantee. 

"It is clear from messages I have received and seen on social media that members want an EGM. If the CII is confident that it has done the right thing, why wouldn’t it be willing to put its appointed directors in front of PFS members at an EGM?

"In order to secure an EGM the PFS Board needs to agree unanimously so to do, and this requires a quorate board meeting, with all CII institute directors in attendance alongside all PFS member directors.  This has not yet happened."

Lord said the other alternative is that over 5 per cent of the membership get their names registered and demand an EGM.

"I hear some are seeking to meet this threshold to ensure that the unilateral action of Alan Valance the CII board chair and the CII is not passed with a nod, and that the members have their say."

Adviser view

Elsewhere, many advisers took to social media to express their concern at the CII’s actions.

Vanessa Barnes, chartered financial planner at Hannay Wealth and a member of the board, wrote that she was confident her PFS board members will refute all of the allegations of governance failings at the PFS during their tenure.

“And I am sure that the PFS will in the very near future respond to each and every one of them in full, directly,” she said.

“The need to do this is in the face of an onslaught of legal notice, assertions and public allegations from the CII. 

“The CII and its legal and communications advisers have clearly spent weeks planning its moves against the PFS – recruiting and then appointing additional board members; sending formal letters; briefing the media and CII employees and even using the PFS email account to contact PFS members with its version of events.”

Barnes, who wrote the post yesterday, said it has continued to roll out a planned communications strategy with its version of events despite “the very vocal concern and antipathy to its unilateral action” by PFS members.

“I have noted the comments of my fellow members that to do this on the eve of the Christmas holidays is cynical and designed to disadvantage the PFS and its members,” she said. 

“I know that my fellow member directors are committed to the PFS and many will be working over the Christmas period to ensure that when the PFS board meets it can plan its response to the CII; share the facts with PFS members and arrange for PFS members to be consulted in an informed way on the advantages and disadvantages of what the CII is intending to do.”

The announcement by the CII left many advisers, PFS members and past presidents shocked. 

Barnes said that unless the PFS board is able to meet very quickly it may be impossible, within the timetable forced on it by the CII, to arrange the extraordinary general meeting (EGM).

Meanwhile, Alasdair Walker, chartered financial planner at Handford Aitkenhead & Walker, has been urging members on Twitter to email interim PFS CEO Don MacIntyre demanding an EGM under clause 5.2 of the PFS Articles.

Walker, with a group of PFS members, has launched a campaign called 'Our PFS' against the CII's full takeover of the PFS board. 

The CII said the reason for the takeover was due to a number of governance issues.

It said these were:

• 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.

FTAdviser understands that these failures were repeatedly raised with the PFS, but they were neither acknowledged nor acted upon.

Accepting these governance risks was not acceptable to the CII group’s board, which was left with no alternative but to act decisively in the best interests of members.

sonia.rach@ft.com 

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