Hi all
Vanessa Barnes, who sat on the PFS board until earlier this year, has written an eye-opening open letter to the chair of the PFS board (Andy Briscoe, who was appointed by the CII and is ex-CEO of the AA), with some very pointed questions about yet more bad news about the CII finances.
In summary, the CII delayed publication of their 2022 accounts until November 2023, with no reason given. On their AGM invite they enclosed a two-page summary of accounts, while asking members to login and vote to approve the full accounts, and only promised to publish them in full when pushed by members. It has since been reported that their finance director will step down in the Spring, and their head of HR has quit with immediate effect.
By way of reminder, this behaviour comes from an organisation currently holding £10M of PFS member funds.
Vanessa’s full letter is published below. Please click the link and share the LinkedIn post with your network.
Speak soon
-Alasdair
P.S The CII AGM is tomorrow at 3pm, and you can login and watch at this link https://web.lumiagm.com/165059159 – please hold the CII to account by asking questions and using your votes wisely.
https://www.linkedin.com/feed/update/urn:li:activity:7135950223486377985
“OPEN LETTER TO MR ANDY BRISCOE, PFS Board CHAIR”
Dear Mr Briscoe
I would like to register concern regarding the CII Group 2022 report together with associated concerns regarding the impending departure of the CEO, Finance Director and recent departures of the CII’s COO, Professional Standards Director and HR Director.
I am aware of the recent open correspondence regarding the PFS reserves but in all of the responses, there has been a singular failure to address why the CII continues to hold £ 10,858M(31.12.2022) of members’ funds rather than transfer it to the PFS bank account holding £ 10.045M.
The PFS Board is now saturated by CII appointed directors with the declared intent to gain a majority control. This is of significant concern to members given the evident conflicts of interest and possibility of insolvency and the continued lack of openness and transparency regarding the true financial position of the Institute.
The PFS Board members have a fiduciary responsibility to ensure that all known risks have been properly mitigated and seek your assurances that this has not been unduly influenced or impeded?
Members would like to understand why the CII’s potential conflicts of interest regarding the PFS financial assets satisfy the objects of the PFS? We would also like to understand why the Board feel it is appropriate to have a significant part of the members’ reserves held “in a multitude of different areas” and,”with other debtors” as explained by Don MacIntyre at the PFS AGM rather than a properly designated PFS account.
Mr MacIntyre also stated “I am confident that the strength of the CII and the processes and improvements that Alan had made, gives me confidence to recommend to the Board that they should have no concerns”. It is for the Board to reach that confidence by considering evidence and issuing proper challenge for which they are legally accountable.
The balance sheet of CII specific, rather than the collective Group level is a significant concern and a failure to safeguard those reserves in the event that a receiver was appointed could be viewed as a “fiduciary breach” of the PFS Board by the PFS Membership.
I would ask the following questions to the entire CII controlled PFS Board:
Have you asked for the remaining funds held outside of the designated PFS account to be transferred to the PFS account?
If you have not asked for the entire reserves to be transferred to the PFS account, how have you reached a level of confidence that there is no risk to the funds despite the CII financial statement and the imminent departure of the CEO and Finance Director.
Has the current PFS Board considered whether a receiver/liquidator would consider funds not held in the dedicated PFS account as not belonging to the PFS?
Some members are concerned that the real reason for the appointment of a majority of CII employees to the PFS Board was not due to concerns regarding governance but a construct in order to demonstrate to the CII’s bankers that the CII is in control of the PFS Member reserves – could you please comment on this point?
Some members believe that the CII repeatedly misleads the membership of the Insurance sector, Local Institutes and the PFS with narrative around the consolidated group accounts and is careful not to publish a P&L for the Institute alone, despite repeated calls to do so. However, careful review of the published PFS accounts and the CII financial statement, particularly the balance sheet,highlights a number of grave concerns.
1. Long Term Investment Fund (LTIF)
The original intention was to invest £10M from the sale of Aldermanbury for the long term benefit of the Group. This is particularly important as the funds for the purchase of Aldermanbury were provided by LI members, not the CII. The actual investment was subsequently reduced to £5M. In 2021 and 2022 the accounts show withdrawals of £3.550M, The realised losses on investment disposal demonstrate that the LTIF is not being treated as a longterm investment at all but being raided annually to subsidise the Institute’s operating losses.
Additional question for PFS Board: What is you rplan for the continued provision of member services in the event that the LTIF is exhausted and the CII continues to demonstrate significant operating losses?
2. CII Non-current assets
The intangible fixed assets ar evalued at £ 6.564M. This is based on a“value” of CII owned software.
Additional question for the PFS Board: How confident are the PFS Board that the value ofthis owned (not licensed) asset and the amortisation figure of £ 9.005M is valued correctly?
3. CII Current Assets
The Institute operating entity balance sheet includes £5.448M trade debts, a rise in debt of 11.25% from 2021. If 50% of this debt has to be written off, the Institute’s net current assets would reduce to £18.888M. The Institute’s debts falling due within one year – which will include the PFS inter-company debt – are £ 22.530M. Even if the Institute liquidated the remaining LTIF, there would not be sufficient funds to meet all of their debts,including the PFS member reserves.
Additional question for the PFS Board: What concerns have you expressed to the
CII Board regarding the fall in Institute current assets to a negative figure and what questions have you raised concerning the significant level of trade debt held by the Institute?
4. Statement of Going Concern
The statement of going concern refers to the Group, not the Institute.
Additional question for the PFS Board: Has the PFS Board asked the CII Board to sign a statement of going concern for the Institute operating entity level?
Earlier this month, Mr MacIntyre also outlined his plans to give members more information and improve transparency. Providing direct, detailed answers to the above questions would be a good starting point.
I, and the wider membership, look forward to hearing from you by urgent return.
Vanessa Barnes FPFS