If you are concerned about the politics of professional bodies, it has certainly been a very interesting Christmas and New Year break.
This will be of huge concern to a significant number of financial planners and advisers. Just how many could prove critical to developments in the next few weeks and months.
Since just before Christmas, the relationship between the CII and PFS board and many vocal PFS members has deteriorated significantly.
Those of you who do have a social media presence may also have noted that ‘hostilities’ have also broken out across social media not just on Twitter, but also LinkedIn and the Meta platforms.
It might be possible to dismiss this as something of a spat that frequently occurs in the world of professional bodies, but this is of much greater significance. It probably doesn’t hurt to restate why.
The Chartered Insurance Institute, among other things, is the body responsible for rewarding and policing the chartered designation for advice firms.
The Personal Finance Society offers exams, of course, with financial advisers required to be qualified before they can advise clients.
It also offers what is likely to be the majority of Statements of Professional Standing to the advice sector, a piece of the regulatory architecture which has arguably been ‘outsourced’ by the FCA to bodies such as the PFS and CISI. Advisers should not be advising without one.
The dispute has become remarkably bitter, remarkably swiftly. It goes back several years, although advisers may be a little surprised with the turn of events. Back in September, it appeared that many of the disagreements between the CII and the PFS had been resolved. They discussed an agreement in principle on moving forward, but that is definitely no longer the case.
Just before Christmas, the CII made clear its view that mediation with the PFS had failed and decided to bring matters to a head.
The news broke on the 21st December with Citywire/New Model Adviser headlining the story - CII to seize control of PFS board after dispute talks break down.
The bold move was accompanied by allegations of governance failures by the PFS board.
CII CEO Alan Vallance said: “It is deeply disappointing that mediation has failed and significant governance failures have arisen, which leave the CII Group board with no alternative but to take this action at this juncture and resolve matters without further delay.”
Three directors were added to the board. These were Sarah Howe, former CEO of Harpenden Building Society; Neil Watts, former board member of Ofqual, the independent exams regulator; and Azlina Bulmer, former director of international at the Royal Institute of British Architects.
Citywire/NMA added that after a 30-day consultation period, a fourth CII director would be appointed to the PFS board in Vallance’s words to ‘ensure good governance prevails’.
CII directors would then make up the majority of the PFS board.
Immediately following this development, the PFS board tried and failed to hold an emergency meeting on the 22nd December, but the meeting was made inquorate as not enough CII-appointed directors would attend to make a quorum. I think this gives a clear sign as to whether parent or subsidiary has the upper hand.
Advisers, coordinated and cajoled by PFS fellow Alasdair Weeks, began the process of seeking enough signatures to call an emergency EGM on 23rd December 2022 with the required number reportedly 2,000. As Money Marketing noted ‘Personal Finance Society (PFS) members are calling for the Chartered Insurance Institute (CII) to hold an emergency general meeting, as it has “failed to listen to PFS member concerns”.’
All the CII accusations have been refuted including by the now-resigned PFS president though that resignation, again, could prove to be a very pertinent detail.
Caroline Stuart resigned on 5th January citing the pressure the CII has placed upon her, but particularly since the decision to impose new directors.
She disputes the accusations of poor governance (as do the other member directors and co-opted advisers of the board) and condemns the methods. However, an important detail is that she is not just resigning as President but also as member-director.
My reading is that this might mean the CII might not need the fourth director for any votes. Also, it feels important that there are co-opted advisers. Their status or lack of it also feels important perhaps particularly in the bid to force an EGM.
There have been other adviser criticisms of the CII throughout the last few years, including from past PFS Presidents and other senior figures from both Sofa and LIA, the two main constituent adviser organisations which formed the PFS.
High up in terms of significance is that former PFS chief executive Keith Richards, who left around a year ago, has also entered the media fray this New Year.
Quoted in Money Marketing last week, he said: “It would also appear from CII assertions and allegations of governance failings and other issues against the PFS board, that it has attempted to position the aggressive takeover as almost inevitable. The CII seems to say it had no option but to take the action it has and clearly did so without consulting the PFS board. That sadly is not the acceptable behaviour of any professional organisation, let alone a professional body.”
I must say I am searching Richards’ view for a kind of killer revelation that might support what we probably have to call his, many members’ and the PFS’s board’s side of the argument. Richards, has in my view, been careful to stay on the side of fair comment. Yet his is an important voice nonetheless, and his view regarding how a professional body should behave is interesting.
In a sort of online melee of opinion in the first week of January, Professional Adviser reported that CII chair Helen Phillips did not want to do the thing that she and her colleagues have done in appointing three board directors and planning another appointment. “We were sadly left with no choice', she says.
And that roughly is where we are. With a few exceptions, those advisers who are concerned seem to be furious with talk of using the EGM mechanism to defeat the CII plans, other calls for a financial planners-only organisation to be recreated or for a new professional body altogether. These views should clearly not be dismissed, though it is a little difficult to gauge just how much momentum is building behind any of these initiatives. For the moment, the CII appears to be having some success in terms of establishing facts on the ground. It looks likely that this chapter may soon close, but I am not convinced we have come to the end of the story.
