In an exclusive column for PA, former Personal Finance Society (PFS) chief executive (CEO) Keith Richards shares his opinion on the PFS' strained and volatile relationship with the Chartered Insurance Institute (CII)...
The CII's decision to publicly criticise the PFS board directors of governance failings, most of whom are practising member volunteers and offer their services pro-bono, was a major mistake and has exposed what many see as a deliberate and underhanded strategy by the CII to discredit members of our profession, simply to justify their desperate need to take control of PFS member assets and revenue.
Whether this is true or not, perception is reality and the CII needs to recognise the reaction and feedback from across the profession.
Caroline Stuart's resignation from the PFS last week, abruptly forced upon her through the aggressive actions of the CII and sadly impacting her health, is understandably seen by many as unacceptable bullying of a woman who has passionately given her services to support her profession for free and the exposure of CII's 'behind the scenes' actions which have also been reinforced by Vanessa Barnes, in her "right to reply" letter to CII Chair Helen Phillips.
Both Caroline and Vanessa are very capable, honest and passionate Chartered financial planner's, who are experienced and successful in their own right, they should be applauded for their commitment and hard work.
Shocking news
Caroline's confirmation that the CII has deliberately hindered and interfered with the orderly running and governance of the PFS is shocking news for members. The confirmation that the PFS board have not been properly or professionally engaged on the alleged concerns prior to the CII going public, is a pretty serious counter-indictment against the CII.
Between 2013 to June 2021, the PFS operated very successfully as a separate legal entity with its own independent and dedicated board, mainly made up of member-nominated directors, representative of the diversity of the membership and of course a dedicated CEO. The strategy and evolution of the PFS was developed by the PFS board collectively and executed on a day-to-day basis by the CEO, a small but dedicated PFS team and a regional network of fantastic and passionate volunteers.
Contrary to CII claims during 2021/22, the CII never actually had any involvement in the strategic development, leadership or management of the PFS, but of course, I can only speak from personal experience between 2013 to mid-2021. In fact, testament to the success of the PFS, in late 2016 the CII adopted many key parts of the PFS strategy as the foundation of its own manifesto in recognition of the PFS and financial planning profession's rapid evolution in the preceding years, post-RDR.
Under the spotlight
I was also concerned to read that the CII has been more focused on reasons to charge the PFS more for a seemingly deteriorating service, rather than resolving the evident operational and service problems encountered by members. However, an even bigger spotlight needs to be shone on the news that the CII has additionally been attempting to back-charge the PFS, for an alleged underpayment of past services, as well as additionally seeking a back contribution towards the CII's severely challenged and significantly over-spent change programme.
The current CII board must clearly be unaware of the process and results of past cross-charging methodologies employed and implemented by the CII.
At the end of 2016, the CII finance director and finance team undertook a more detailed review of PFS charges against the ‘actual' services delivered by the CII that year - as CEO of the PFS at that time, I had oversight and as publicly announced by me at the PFS AGM in 2017, the review established that the PFS was being overcharged which resulted in a £1m reduction.
This review was naturally accepted and signed off by the board, the CII and PFS auditors and the methodology was supported by the CII's Audit and Risk Committee as part of a newly implemented Target Operating Model (TOM) introduced by the CII's CEO in 2016.
It is therefore extremely concerning that we now learn of attempts to claim back charges from the PFS for the alleged underpayment of services and apparently without proper consultation with the PFS board. I am confident that the CII would wish to rectify any potential misunderstanding and would of course be prepared to aid the auditors if required.
As far as a retrospective back-payment to the CII's five-year manifesto is concerned, which started in November 2016 and should have concluded in 2021, it was agreed from the outset that it was the CII's change programme and the PFS was logically and appropriately not expected to contribute. The financial positions of the respective bodies at the time were the reverse of where they are today, as well as the CII still owning its unencumbered London head office.
Massive gamble has backfired
The decision to go public by the CII seems to have been a massive gamble which has backfired in winning any support and has again returned the focus on the CII's behaviour and multiple operational underperformance issues, which are well documented. More specifically, most believe they are seeing clearly the link between the latest actions as validation of concerns over the CII's potentially critical financial position.
Although the CII has remained less than transparent regarding the position of its own finances and hides behind ‘group' account figures, the market is highly sceptical of anything the CII now says, which has significantly impacted its credibility and the confidence and trust it once held by the majority.
In my view, the CII board needs to seriously reconsider its position urgently and recognise the unnecessary damage it is causing to itself and the wider professions of insurance and financial planning before it becomes irreversible.
The CII simply needs to step back, and respect the independence of the PFS, which is aligned to the needs of the members and relevance to them of having their own dedicated professional membership body. Both bodies can co-exist in harmony as they once did, where there is a will, there will always be a way.
Logically an ‘independent' mediation needs to be put in place quickly and should include member representation as observers to ensure complete transparency and work together on a mutual route forward, if not I fear the CII, as we have all known it, may never recover.
Keith Richards is chair of the Financial Vulnerability Taskforce and former PFS chief executive
