Vanessa Barnes and Gordon Wilson have resigned as directors from the Personal Finance Society (PFS) board following the professional body’s dispute with the Chartered Insurance Institute (CII).
This comes after the PFS announced it will have an independent governance review conducted by Integrity Governance following heightened tensions between the PFS and CII. The CII sparked criticism after it appointed three of its directors to the PFS board in late December 2022.
The move was deemed aggressive and also led to the resignation of PFS president Caroline Stuart at the beginning of January 2023. This sparked a consultation with PFS members, conducted in January 2023.
The resigning duo, who between them have served as PFS non-executive directors for 11 years, expressed “deep misgivings” over the future of the PFS £19m ($24m, €22m) cash reserves if steps are taken to wind it up, and will propose a motion to the forthcoming PFS annual general meeting in September to block the CII or another entity from gaining control of the funds.
The motion will instead propose that, in the event the PFS is wound up, its reserves will be distributed amongst its members, who would each receive around £500.
‘Bullying and intimidation’
Barnes, who is a financial planner at Hannay Wealth, said in a statement: “Since March 2021 and the third attempt to ‘de-register’ the PFS, the bullying and intimidation carried out by the CII board and executives towards the member directors of the PFS board has been shameful.
“They have used all available resources to silence volunteer member representatives, issuing repeated threats which have caused significant distress to those involved. Any normal responsibilities towards a duty of care have been ignored.
“For over a year, I have been asking difficult but necessary questions with regard to costs, in order to fulfil my fiduciary responsibilities. These legitimate and pressing concerns have been ignored and remain unanswered. The failure to properly respect the use of members’ reserves in line with the objectives of the PFS, together with the inadequate safeguarding of the entire PFS members’ reserves, means that I cannot agree to approve the PFS Accounts for 2022.
“I am sure the vast majority of my 40,000 fellow PFS members will agree this is a remarkable and very concerning situation. For many years, the enviable success of the PFS was built by dedicated executives, volunteers and a member-led board. Today, very worryingly, the PFS board is led by a majority of employees of the CII.
“That’s the same CII which, in recent years, has seen an exhaustion of its once-considerable reserves and assets, has failed to introduce new and relevant areas of study and has spent millions of pounds on an IT restructuring project that continues to fail in the delivery of a modern membership proposition.
“Under these circumstances, it is impossible to be an effective representative of PFS members and I am resigning my position as a member director of the PFS with immediate effect.”
‘Enormously challenging’
Wilson, who is managing director of Carbon Financial Partners, also said in a statement: “Unfortunately, it has been enormously challenging to try to keep the PFS on its course of leading the profession whilst also fighting a rearguard action against the CII. Indeed, the board’s relationship with members is now at an all-time low, largely because it can no longer represent members effectively. In effect, the PFS is now completely controlled by the CII.
“Far too much time and money has been wasted on responding to CII demands; having to seek advice on the viability of loans or acting as a guarantor for loans; on failed mediation; on tax investigations; and now on a governance review. The PFS didn’t want any of this. It was all forced upon it by the CII.
“The CII claims the ongoing dispute isn’t about the money, but that will be for others – especially the 40,000 PFS members – to judge. The CII’s deteriorating financial position is well documented. I have been calling for more openness and transparency around the charge the CII makes to the PFS for services. The ‘recharge’ is opaque, and a recent audit by an independent accountant found it was not substantiated.
“Ironically, the CII would be far more secure if it was able to build a positive, mutually-beneficial relationship with a strong, autonomous and independent PFS. By forcing the issue with the PFS and absorbing it into the CII, it simply pushes the membership away.
“I fear this strategy will mark the beginning of the end for the PFS as an independent, meaningful and robust professional body because the CII simply doesn’t understand the needs of PFS members. Unless both the PFS member consultation findings and the PFS board and governance review are published in full, then our members will remain in the dark about the highly unsatisfactory relationship between their professional body and the CII.”
CII/PFS response
PFS interim chief executive Don Macintyre and CII chief executive Alan Vallance issued a response to Barnes’ and Wilson’s departure from the PFS board.
They said that the remaining members of the PFS Board met on 21 June to approve the appointment of new interim member directors, pending the outcome of a formal recruitment process that will begin immediately.
Their appointment “will ensure that the PFS board can meet in quoracy and immediately resume serving our PFS members, including investing the PFS reserves in ways which best serve PFS member interest”, the duo said.
“As has been repeatedly stated over the past 12 months, there is no intention or value in deregistering the PFS. Ensuring good governance is in place across the group has always been our priority, and the CII will continue to support the actions the PFS board considers necessary to ensure compliance with corporate governance best practice.”
