Advisers are split on whether the Personal Finance Society’s independent governance review will be positive news or if it will make any difference at all.
Yesterday (April 5), the PFS announced that a review is being conducted by the Integrity Governance, which will be an objective, independent assessment.
It will cover the chief executive officer’s role, the board’s operations and structure and advice provided to the board by both the Chartered Insurance Institute (CII) governance team and other relevant CII advisers.
Phil Billingham, managing director at Perceptive Planning, said: “In principle, a proper independent review has to be good.
“I’m pleased that the PFS is taking control of this, to try to move an unfortunate situation forward. I look forward to seeing the eventual outcome.”
Likewise, chartered financial planner Elliot Guthrie said it was “a positive start” and goes some way to address the conflict between the CII and PFS on whether there is or isn't governance failings at the PFS.
“However the outcome of the review should be made clear to members, if the PFS are to go any way to reassuring and engaging members,” he said.
“I do still have concerns about the power dynamic between the CII and PFS, particularly that the CII do not seem to value financial planning, nor do they actually 'get' what we do, but this review seems to be a step in the right direction to getting this mess sorted out.”
Meanwhile, Alasdair Walker, chartered financial planner and managing director at Handford Aitkenhead & Walker, said he hopes that the external governance review “will put to bed the apparently spurious claims the CII have made about the PFS”.
“It still misses the main point, though, and that is that the CII currently have access to around £10mn of PFS funds, apparently held in escrow, but as a fee-paying member of PFS I see no evidence that it is being ring fenced for PFS,” he said.
“Until I see that evidence, I will not be convinced that the CII are meeting their legal and fiduciary duties to PFS members.”
A spokesperson for the CII said the group's board welcomed and is actively supporting the PFS board’s decision to appoint a third party to undertake an impartial review of its governance.
"As always, we remain committed to doing all that we can to build a strong future for the PFS, and for the PFS to thrive as a successful, high-profile professional membership body. We await the PFS Board's plan to address the governance concerns previously identified and look forward to working together on next steps in the best interest of members," it said.
‘Deeply suspicious’
Elsewhere, some advisers remain a little more sceptical of what is to come from the review itself.
Tim Morris, IFA at Russell & Co Financial Advisers, said: “Following the ongoing and bitter power struggle, I’m deeply suspicious of the CII's motives to wrestle control of the PFS.
“The independence and even existence of the PFS, at least in their current guise, appears under threat. “
Morris said he cannot recall any previous concerns about governance of the PFS and instead argued that it appears to be “a much better run organisation than the CII”.
“And certainly more financially stable,” he added.
“It really seems like a case of throwing enough mud until some of it sticks.”
Meanwhile, Dennis Hall, managing director of Yellowtail Financial Planning, said he is somewhat disinterested now, and has little faith that this will achieve anything significant for the membership.
“It’s the bland leading the bland,” he said. “Here we are with yet another review (which members are ultimately paying for) which will reach a conclusion and a series of recommendations.
“That will lead to a consultation and then we’ll finally end up with a watered-down version of something which barely satisfies both sides, but they’ll live with it.”
Hall argued that both sides will claim a “victory” but basically it changes nothing that positively impacts members.
“It’s symptomatic of the general state of affairs across the entire country, it really does feel as though we have gone to hell in a handcart, yet somehow a bunch of overpaid consultants are going to pull a rabbit out of the hat,” he said. “I don’t think so.”
Don MacIntyre, interim CEO at the PFS, said: "This review, conducted by the experts at Integrity Governance, will be the first independent review of this nature in the PFS’ history. It will be entirely free of influence from either the CII or the PFS.
"I am pleased that the PFS Board has determined that this is the best way forward for moving past the current challenges between the PFS and CII. This review will ensure the PFS has the strongest possible governance structures to ensure we, the executive, and the Board, are making key decisions and undertaking actions always in members’ best interests on the basis of the best advice”.
The saga so far
In December, the CII announced its decision to appoint a majority of directors to the PFS and three institute directors to the PFS board with immediate effect, following failed mediation attempts.
At the time, Alan Vallance, CEO of the CII, said in order to “guarantee the highest standards of governance”, after a 30-day consultation period has elapsed, the CII group board intended to form a majority by appointing a further institute director to the PFS board.
In the member update, Vallance said the CII group board carefully reviewed the detailed evidence in December and made its decision to appoint further institute directors based on that.
The move prompted the president of the PFS, Caroline Stuart, to step down, citing the “tremendous stress and pressure” put on the PFS’s board by the CII.
However some PFS board member directors and co-opted advisers called for more evidence of the governance failures to be provided.
The PFS strongly denied the claims.
Following this, the CII sent evidence which supported all the concerns raised with PFS representatives during 2022 to the PFS board.
The PFS said this review follows a more recent change to the governance initiated by the CII, following its decision to appoint three new institute directors to the PFS board in December late last year.
The review also comes following an extensive consultation of PFS members, conducted in January of this year.
These findings have been reviewed by the PFS board and presented to the CII board and they will now await the board’s response to the consultation and the governance review, with the final phase of this work to be presented to both boards in April.
sonia.rach@ft.com
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