Has the CII bitten off more than it can chew in PFS row?

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Has the CII bitten off more than it can chew in PFS row?

It was on a Wednesday evening, four days before Christmas, when the Chartered Insurance Institute dropped a bombshell that it planned to take control of the Personal Finance Society board and would appoint directors.

This has led to a clash between the CII and the PFS and subsequently resignations from the PFS.

Many advisers have expressed shock and disappointment with the way the CII has acted, and have also said they are considering a move away from the institute.

Dennis Hall, a chartered financial planner and founder of Yellowtail Financial Planning, says his inclination is to move all Yellowtail membership from the CII/PFS to the Chartered Institute for Securities & Investment, even if it means dropping his chartered title.

Hall told FTAdviser: “Chartered is an important title. It is hard work to get it, whether personal or corporate and people will obviously think twice about giving this up.”

But it does beg the question: If more and more advisers decide they no longer want to be CII/PFS members, what will this mean for the future of the services the organisations provide to financial planners?

A significant amount of the CII’s revenue will be generated from exam fees and membership fees through the PFS.

This latest row is not the first time things have turned sour between the PFS and CII, but this time it appears to be coming to a head.

Last year the CII came under pressure amid plans to deregister the PFS.

More recently, the CII has claimed its plan to take control was because the PFS board has acted inappropriately to such an extent that the CII had to step in and take control – accusations that have all been strongly denied by the PFS member directors.

The CII has in turn denied the reasons behind the move is to squash the PFS, roll-it into the CII and secure its assets and reserves to prop up the CII.

Helen Philips, group chair at the CII, has said PFS board governance failures are not, as claimed, “baseless or without foundation" and that suggestions that the CII group board has appointed further institute directors for any other reason is “deeply misleading”; adding that the new directors are focused entirely on protecting and serving PFS interests.

A spokesperson for the CII says its group board remains deeply committed to its PFS members and wants to see the PFS "flourish" as a professional membership body.

He adds: "It is essential that PFS members are now consulted, and CII staff are already supporting this exercise as part of their normal, professional service to the PFS board and members.

"The PFS and CII are essential voices for the UK public in these challenging economic times and now more than ever, all our time, energy and resources should be fully invested in building a stronger future and delivering exceptional services for our PFS and CII members.”

Looking at alternatives

But there is still growing discontent among advisers over the recent events, with many considering alternatives to the CII.

Hall says spiritually he feels more “at home” with the CISI and their financial planning approach given the CISI took over the Institute of Financial Planning, which he says “is finally looking like it is bedding in”.

Additionally, the appeal of the CISI route is the possibility of porting qualifications over and retaining a chartered title.

He adds: “I have been considering this since the previous PFS/CII spat and really waiting to see how quickly the CISI can evolve its offering to me and my team.

“For people part-way to chartered through the CII suite of exams we want to see a cost-efficient and smooth transition from one course of study to another. Also how they deal with being able to move from one chartered designation to another with a similar degree of ease, whether that’s individual or corporate. 

“The CISI has made some encouraging noises in the latter half of 2022 but I need to have a more formal conversation so that we don’t lose too much by transferring from one body to another.”

Historically, the most popular route to gaining a Level 4 recognised financial advice qualification and then going on to gain a chartered status has been through the CII.

But the CII is no longer alone in offering advisers that much-esteemed chartered title.

CISI membership growing

In July 2021 the CISI received consent from the Privy Council to award the chartered designation to financial planners.

Members who have achieved the Certified Financial Planner certification may use the Chartered Fellow (financial planning) designation.

Sally Plant, head of financial planning at the CISI, says membership is growing for its certified financial planner cohort.

"We are now on an upward trajectory with more than 160 candidates currently sitting our financial planning pathway and more than 90 new CFPs in 2022," she adds.

I have been considering [porting qualifications over] since the previous PFS/CII spat.Dennis Hall, Yellowtail Financial Planning

The CISI recognises other professional body qualifications as access to its higher level qualifications and as a route to the CISI chartered fellow (financial planning) designation or chartered wealth manager.

Plant adds: "As a chartered financial planner, there is a fast track to gaining the CFP. This does not require a formal examination to be sat but still needs the financial plan, which is written from home to be completed. This would give [the individual] access to both the CFP designation and the chartered fellow (financial planning).

"Alternatively, they can join immediately as a member and then after one year CPD become a chartered member."

Different strokes for different folks

When it comes to what the CII, CISI and The London Institute of Banking & Finance offer in qualifications to financial advisers, Julian Hince, head of Quilter Financial Adviser School, says the qualification does not differ between the various bodies. 

He adds: “All the Level 4 and chartered qualifications put on by any of the bodies must meet the national qualification framework put in place by Ofqual, the regulator of exams and qualifications.

The CII needs the PFS members more than the PFS needs the CII.Alasdair Walker, former chair of the PFS’s financial planning panel

“However, while the level of the qualification does not differ, the way you are assessed does from body to body. For example, the CII’s preferred method of examination is a multiple-choice exam for the majority of their Level 4 exams.

“Meanwhile, the LIBF examination has more of a practical element, testing students using case studies, requiring the creation of suitability reports and written and multiple-choice exams based on real-word scenarios. This is good for people who learn in different ways and apply their knowledge in more practical scenarios.”

"We have found that over the years that we have worked with the LIBF they have been very receptive to evolve their training and testing. In our experience, when our students have passed and get out into the real world they are well prepared to start work due to this more practical examination."

Relationship deteriorating 

Alasdair Walker, the now-former chair of the PFS’s financial planning panel, who resigned on January 9 over the recent behaviour of the CII, says the current row risks eroding all the good will and by extension the quality of services that have been developed by volunteer members.

“The CII needs the PFS members more than the PFS needs the CII,” Walker adds. “If the PFS stops offering members important content they need, good events run by employees and member volunteers and stops being this body for [financial advisers], people will look elsewhere.

“It’s very sad to see as I also know there are good people at the CII.”

There has been a lot of work over the years to make the PFS what it is today, and the CII are hellbent on screwing it over.Dennis Hall, Yellowtail Financial Planning

Tim Morris, a financial adviser at Russell & Co, who says he knows advisers who are considering alternatives to the CII, recently tweeted he would cancel his membership if the CII took control of the PFS board.

Morris told FTAdviser: “I would certainly be looking at alternative options. CISI would be my preference.”

Yellowtail's Hall says he has also had conversations with other advisers who have been troubled by events over the past year.

“For a majority of advisers who are planners and those who are active within the PFS, they are rightly annoyed with the CII and may view the CII brand as irreparably damaged," he says.

“Historically I was involved at a regional level – London region chair and other officer positions – and I found the interaction between PFS and CII as very difficult, toxic even. The CII don’t really get the PFS and the membership.

“There has been a lot of work over the years to make the PFS what it is today, and the CII are hellbent on screwing it over.

 

"If there was a viable alternative that would allow people to move away from the CII they would jump at the chance. The CISI is one potential, though not everyone is convinced and there are murmurs of a stand-alone breakaway organisation.”

Following the recent resignation of Walker and Caroline Stuart as president – the latter detailed in a very personal letter – it is difficult to see where all this will end if the CII is hit by a mass exit of advisers and is unable to stem the flow.

Where next?

The lobby group, Our PFS, is calling on PFS members to email Don MacIntyre, the PFS chief executive, to call for an emergency general meeting to air the concerns of the PFS.

When the CII announced it would be taking control of the PFS board in December it said the PFS was a subsidiary of the CII group, and the PFS’ articles of the association gave the CII group board the right to equalise and/or appoint a majority of directors to the PFS board.

Commenting on this, Jabbar Khawar, partner and head of corporate at Blackstone Solicitors, says: “Without reviewing fully the constitution of the PFS (and perhaps that of the CII), it would be inexpedient to make any specific observations here, but it would seem sensible for the PFS membership to seek its own independent legal advice on the proposed appointments to its board.”

It is not good for the reputation of the financial planning profession to have this dispute played out in public.Nick Bamford, Informed Choice

Phil Billingham, managing director or Perceptive Planning and former director and subsequently vice-chairman of the Society of Financial Advisers, the predecessor to the PFS, says: "This has gone on long enough. If the CII wants a distribution arm to sell exams, then I think inevitably at some point there will be a separate and independent body [focused on the] many issues affecting financial planning today.

"The CII is the body that represents financial planners. If the PFS loses what little independence it seems to have had [and we] reach a point that we as advisers do not feel the CII has our best interest at heart, then it’s hard to have that relationship of trust where they are representing us."

Nick Bamford, founder of Informed Choice Financial Planning and previous chairman of Sofa, adds: "It can’t be good for anyone when professional bodies, who should have the best interest of members, and nothing else, front and centre, are in dispute.

"It is not good for the reputation of the financial planning profession to have this dispute played out in public."

Ima Jackson-Obot is deputy features editor of FTAdviser