Open Letter to the PFS Board
27th October 2023
To: The Board of the Personal Finance Society
I am writing the following as an open letter, and have asked for members who share my concerns to add their names as signatories.
I/we request that 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, on the basis that these could well be seen to be fraudulent.
- If CII are unable to transfer funds immediately, as they should if they are acting as bona fide and competent trustees, 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.
I first wrote to the board with my concerns on 1st February 2023, and explained that I intended to publish the letter I wrote a week later if a substantive response had not been received.
I have, to date, not received a response. I chose not to publish the letter at the request of people close to the board, on the promise that a substantive response would arrive. It did not
I attended the AGM on 19th September 2023 and was assured by the Interim Chair, Andy Briscoe, that the letter would be re-circulated and a response would be given. To date, that has still not happened.
At the AGM, a series of unsatisfactory answers were provided to members, including myself, who asked serious questions about their concerns.
As of 26th October, it appears that CII Interim CEO Alan Vallance will leave for another professional body – one that apparently has its own challenges and controversies.
I understand that the substantive changes since the letter published in full below was written are as follows:
- The CII have “flooded the board”, appointing seven institute directors with little justification and in spite of previous assurances that they would not take this course of action.
- Following the resignation of two long-serving member directors, two new member directors have been appointed and ratified by member vote at the AGM. There is only one member director with a working understanding of the situation between the bodies over the past two years.
- This brings the balance of the board to 7/3 with a single lay director, with the chair of the board appointed by the CII.
- PFS “took control” of the £10M of member funds. This leaves around £20M still outstanding, and as far as I can tell, entirely unaccounted for by either CII or PFS.
The last point is the crux of the scandal:
£10M of funds that are constitutionally required to be used for the exclusive benefit of PFS members are missing, and despite asking for the better part of a year, nobody can tell me where they are.
Full body of original letter:
I am writing as a member of the society for over a decade. For much of that time I have volunteered, both with the Insurance Institute of Leicester, a CII local institute, and the PFS directly via its Financial Planning Panel. I stepped down from the panel this month as a result of the behaviour of the CII in respect of PFS member director.
Along with many other members that I have spoken to, I am deeply concerned about the risks Personal Finance Society members face from the CII.
The last month has shown me that the CII have no intention to be held to account for their shocking behaviour, and that their executive and board are prepared to:
- Make repeated statements on record that are verifiably untrue, and refuse to retract them.
- Defame volunteer member-directors with unsubstantiated accusations, risking impairment of their professional reputations and careers, and depriving them of natural justice.
- Confirm publicly that they will seek to “readdress historic cost sharing” with PFS – an action that I believe, and that legal advice I have received also suggests, amounts to corporate fraud.
This position seems even more clear following the email sent by CII’s CEO Alan Vallance on 27th January.
CII executives have, on record, stated that PFS is a wholly owned subsidiary. I don’t believe this is structurally possible, as there is no share capital for CII to own.
PFS is a member organisation limited by guarantee. Whilst CII has special status as a PFS member by virtue of the articles of association, it cannot ‘own’ the organisation, because there is nothing to own.
I believe the current mess stems entirely from this fundamental misunderstanding.
My understanding is that the CII is close to running out of liquid funds as a result of operational overspend for at least the last five years.
In contrast, the PFS has made operational surpluses year on year, whilst paying (as I understand it) above market rates for all services provided by the CII.
As a result, the PFS has around £20M in member reserves. I understand that the PFS has “sight” of £10M of this, but the funds are held in an account requiring joint signatories from PFS and CII. The other £10M is apparently held on trust for PFS members by CII. My primary concern is that these funds may have already been spent, and obsfucated by CII.
Furthermore, I understand from news reporting (https://citywire.com/new-model-adviser/news/evelyn-auditors-said-significant-risk-cii-would-fail-to-repay-pfs-loan/a2406131) that the PFS board received advice that there was significant threat of insolvency at CII.
Under Companies Act 2006, all directors, including those appointed by CII, owe an exclusive duty to PFS, and this duty is of a fiduciary nature.
The duty is to promote the success of the company – for the avoidance of doubt, that means promoting the success of PFS, not CII.
To act in accordance with this duty, I believe the following needs to happen immediately:
1: The PFS board must seek an immediate transfer of PFS funds to an account in the sole name and control of PFS.
2: an undertaking by PFS’s board not to allow PFS funds to be ‘re-charged’, or ‘re-addressed’, or invoices for ‘past adjustments’ to be accepted, on the basis that these could well be seen to be fraudulent.
3:If CII are unable to transfer funds immediately, as they should if they are acting as bona fide and competent trustees, to initiate proceedings for recovery of the funds via the courts.
Under the 2006 Act, members have the right to bring a derivative action on behalf of the company, if the directors are in breach of their duty.
I am led to understand that third-party legal funders who have heard the substance of the situation believe there is a case to answer, and therefore funding available.
If the board refuse to take reasonable steps to protect the interests of PFS given what is known about CII then I believe they leave themselves open, in a personal capacity, to such an action.
Alasdair Walker FPFS
Additional signatories: 268
Michael I Holden
James de Lisle Wells
Michael Burgess Rowson
Amy E Crulley
Andrew Grant Johnston
Paolo Joseph Rosolek
Paul Anthony Carl Melvin
David John Ingram
James Granville Smith
John George Sangster
Paul Cheriton Wreford
Timothy John Walsham
Christopher John Bowmer
Robert Todd Jeffries
Bryan J Hollingsworth
Nicholas Heslin Lawson
Dennis Stuart Osman
Mrs Shireen Fernie
Samuel Colby Butcher
Edward Brian Edgar Gibson
John William Marshall
Ian Robert Carlton
Paul John Fox
Peter B. Matthew
Matthew John Brooks
Mr Geoff White
Simon Drake FPFS FCSI
Ian Robert Porter