It has been almost one year since the dispute between the Chartered Insurance Institute and the Personal Finance Society began and there have been many developments between the body and its members since then. FTAdviser delves into the issues.
It all began in December 2022 when the CII announced it was taking control of the PFS board amid "failed mediation".
This led to members of the PFS board hitting back at the CII after its meeting was rendered “inquorate” due to insufficient CII appointed directors, leading the institute to accuse the PFS of “another contravention” of board confidentiality.
Since then, there have been exits and appointments at the group.
Last week, the CII announced that Alan Vallance will step down from his position as chief executive in Spring 2024 to take up the equivalent role at the Institute of Chartered Accountants in England and Wales.
This comes after Sian Fisher announced in 2021 that she would step down after more than six years at the helm of the CII.
Last week, there was also some clarity on what had been spent on trying to resolve problems between the two bodies.
In its full-year results ending December 31 2022, also published this month (October 25), the PFS reported total operating expenses of £7.99mn in 2022, of which £0.85mn was towards expert legal and financial advice on the back of the CII saga.
The accounts said the spend on expert legal and financial advice was "required by the unique circumstances triggered by the CII's desire to begin mediation from July 2022".
This recent news has led to members of the PFS signing an open letter to the board outlining their concerns and calling for all PFS funds to be transferred to that organisation's control.
In the letter, dated October 27, Alasdair Walker, chartered financial planner and author of the open letter, called for members who shared the same concerns to add their names as signatories. There are currently around 197 signatories.
The letter urged the PFS board take the following "urgent" steps:
- Seek an immediate transfer of all PFS funds to an account in the sole name and control of PFS.
- Provide an undertaking not to allow PFS funds to be ‘re-charged’, or ‘re-addressed’, or invoices for ‘past adjustments’ to be accepted.
- If CII are unable to transfer funds immediately, to initiate proceedings for recovery of the funds via the courts.
- Make immediate amendments to the articles of association to clarify the position of PFS funds in the event of wind-up, and to protect the body against further threats from CII.
Keith Butten, director at Boosst - Financial Planning, said what PFS members have endured over the past couple of years has been anything but the positive contribution to the profession it should be.
“Elected volunteers being unable to get and share information with the membership that they represent is just one small example,” he said.
“Members have been kept in the dark, like Alasdair, I submitted questions and was promised answers but nothing informative has reached the membership.
“Thankfully we have more than one professional body and the PFS, whilst having large member numbers due to the CII qualifications, is not the only show in town.”
Button said at Boosst, he uses the Chartered Institute for Securities & Investment for Statements of Professional Standing, their learning suite and CPD recording.
“You could say that like many firms, Boosst is proof that we do not need the PFS/CII but choose to support it simply out of loyalty and the choice it adds,” he said.
“Those serving the PFS members, whatever their background, would do well to understand they are not a monopoly and to focus on members first, after all they are supposed to be a professional members body in the finance sector.”
Values no longer aligned
Some members of the PFS have been left feeling disheartened after the most recent news.
Richard Fyfe, chartered financial planner at Fyfe Financial said it’s just another episode “in a rather depressing story of failure at the CII”.
“There’s not much that the CII can do in this instance with Vallance having links to ICAEW but on the back of what’s been going on between the CII and the PFS over the last few years it just seems like another blow to a professional body we were already losing faith in,” he said.
He added: “It really felt like the PFS were finally ‘getting’ financial planning and what it’s all about. It feels like it’s all being wasted.
“We’re a Chartered firm so will stick with the CII but there’s no enthusiasm there.”
“You’d got all these amazing people giving up their time to promote the PFS within the profession and the way they were treated by the CII was disgusting,” he added.
“I just feel disillusioned with it all.”
Likewise, Dom Spalding, director and chartered financial planner at Expert Wealth Management said he doesn’t know enough details but as a long standing CII/PFS member, he is “deeply saddened by the events”.
He said Walker's letter indicates there has been misuse of member funds.
“If this is true, the CII/PFS board needs to be held to account,” he said.
“As a director of Expert I can say that we are now actively discussing whether we continue with our chartered firm designation, PFS membership and CII as our SPS supplier.
“We feel that the CII values are not aligned to our own.”
In the most recent PFS results, it said the prolonged uncertainty between the two bodies created some concerns among corporate and individual members.
However, there was still an increase in membership numbers.
The PFS reported that it ended the year with 40,032 members - an increase of 658 compared to 2021.
Of these members, it had 3,827 fellows, 4,694 associates, 21,684 at diploma level, 3,194 at certificate level and 6,633 at student level and affiliates.
Further action
PFS members, who signed the open letter, argued that legal or regulatory action could be needed in this case.
Eileen Murphy, managing director of Informed Training, said she was disappointed with the support so far, and said if Walker’s letter is accurate, it is “hugely unprofessional” and questioned if what is going on is even legal.
“It is absolutely appalling, disgraceful behaviour by the CII board and I am surprised they are allowed to act in this way,” she said.
“Alasdair’s four points seem perfectly reasonable and indeed an absolute requirement that the CII must morally adhere to at the least- and I hope that more than the current 197 members sign the letter and show their support.”
Elsewhere, Dan Brent, founder & CEO at DFB Wealth Strategies called it “corporate sabotage”.
“The CII, a group of insurers, would appear to be trying to subsume the PFS, our personal finance body, allegedly pocketing millions in the process,” he said.
“If this isn't the CII's plan, then why haven't members heard from the CII leadership to the contrary.
“Promises have been broken, the board has been flooded 7 to 3 in favour of CII and to me just looks like the larger body trying to divide and conquer, and pocket millions in PFS revenue.”
Wider issues within the PFS
In its full year results, the PFS said its board and CEO have worked with the CII to tackle concerns about online training and examination processes which continued to be disrupted in 2022.
This comes as the CII has been plagued with a number of technical issues over the past couple of years.
For exemple, in November 2021, the CII faced exam glitches as candidates were unable to view their results and certificates online.
During the pandemic, the CII also apologised to candidates for “unacceptable instances” including problems with accessing remote invigilation sessions and technical issues during sittings.
However, aside from these, there are wider issues that the PFS and CII need to tackle, according to some members.
Tim Morris, IFA at Russell & Co Financial Advisers, said that he would really like to see someone who understands financial advice/planning at the top.
Morris explained that having worked in banking for a decade, he always felt that financial advice was seen purely as a “money-spinning enterprise”.
He said although the bottom-line profit is paramount for any business, especially a bank, they are effectively run by accountants whereas financial advice firms are not.
“They are run by people who generally have more compassion for the end client,” he said.
“That’s not to say compassionate people don’t work for banks. Lots of them do (I did after all).
“The fact is, they are far removed and detached from any client contact.”
Morris said his point is that you probably won’t succeed with an accountant making decisions for financial advice firms.
“The same way that most accountancy firms wouldn’t be well run by a financial adviser,” he said.
Meanwhile, Julie Flynn, financial planner and coach at Ebb & Flow Financial Coaching, said Walker is doing a great job of leading the charge on this and represents the voice of many of the members on the issue with the CII flooding the board and the issues around the finances.
However, she said raised other concerns about the CII around inclusivity and having an organisation that is fit and safe for everyone.
“The way they've approached this issue to me is indicative of the culture that exists in the CII,” she said.
“There doesn't seem to be any accountability. I've been hearing stories all year about sexist behaviour happening at events.”
sonia.rach@ft.com
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