The CII are making a number of claims via various outlets, which amount to misinformation and obsfucation.
I have addressed some of these via LinkedIn, and will post here for for further reference.
CII “5 Myths about the CII and PFS”
Christopher Shadforth, recently appointed Director of Communications at CII, posted “The relationship between the CII and PFS: myths and misperceptions”.
The relationship between the CII and PFS: myths and misperceptions
I joined the CII Group in October. One of the first things that struck me about the organisation was the myths and misperceptions that exist about the two membership bodies. The announcement by the CII Group Board of its intention to appoint a majority of directors to the PFS Board following significant governance failures has renewed life in some and spawned others.
I unpick some of the most commonly asserted below. The original post is in italics, and my response follows.
Myth 1: The PFS is a separate entity
The PFS Ltd is a company within the CII Group. It’s a subsidiary, established in 2004, under the PFS Articles of Association. Those Articles make clear that the PFS cannot be extracted from the CII Group.
The PFS is a company limited by guarantee to its own members, operated as a going concern within the CII group. This arrangement wasn’t, as I understand it from those who were in the room on the day, intended to be a parent/child relationship, but a sibling relationship, with each party bringing something to the table.
Myth 2: The PFS is run by a PFS Member Board and PFS employees
The PFS Board is constructed of PFS Members and Institute Directors. The PFS Articles of Association state that there must be two Institute Directors, and that the CII Group has the ability to appoint a majority of Institute Directors.
There are just over 200 employees in the CII Group, and just two work for the PFS – the interim CEO and his Executive Assistant. The CII Group provides every aspect of every service to both the CII and PFS, along with the other companies in our Group.
I’m afraid this point is disingenuous. The PFS has operated under a service agreement with the CII for years, and that has been well-known and understood by both parties, apparently until it became convenient to forget. There are many people that I have had the great privilege to work with, who are PFS employees regardless of what the service-agreement-led paycheck says.
Myth 3: The CII has ‘bullied’ its way onto the PFS Board
The PFS Articles of Association establish that the PFS Board should include Institute Directors and there are provisions for the CII Group to appoint the majority of PFS Board members. That is the mechanism that the CII Group Board has needed to utilise given the serious governance failings that have been observed.
Sian Fisher attempted de-registration three times without flooding the board, and I believe the threat was publicly mentioned, perhaps in an exchange published by Robin Melley TEP FPFS last year? Show the members the governance failings that are apparently so severe that 30 days’ notice needed to be given on the run up to the Christmas holidays?
Myth 4: This is just a ‘cash grab’
The decision of the CII Group Board to appoint additional directors to PFS Ltd will not result in cash being moved from PFS Ltd to any other company within the Institute’s Group of companies in any way different from now. Money already flows between the companies in order to pay for the services PFS members receive from the Group.
The service agreement makes clear under what circumstances funds can “flow”, and the ~£21M intercompany loan is appropriately marked in the CII and PFS accounts – it is not accurate to imply that these are simply “flows of funds”.
Myth 5: The CII is planning to deregister the PFS?
There is no plan whatsoever to deregister the PFS. The CII sees no merit in such a move. Indeed, we want to see PFS Ltd flourish as a professional membership body within the wider Institute Group of companies.
Thanks for the clarification. Is this the official stance of the CII as at 22nd December 2022, or your opinion?
(This was subsequently clarified by Alan Vallance to be the official stance at that date).
Myth 6: The PFS makes healthy profits and the CII makes losses
The PFS profit and loss account includes PFS membership fees and a recharge from the CII for central services provided. The PFS does not pay for the full cost of providing these services. Nor has the PFS paid for any of the costs related to the pandemic, any of the recent (and significant) IT investment costs, the cost of running exams or the cost of providing chartered status and Statements of Professional Standing to PFS members. As a result, the PFS Ltd company has effectively made super-normal profits every year and the CII Ltd entity has been wearing losses to fund this result. This needs to be redressed going forward.
Please can you break down the costs that the CII believe haven’t been fully paid? Could it be seen as a governance failing of an organisation like CII to not properly allocate or charge costs to other group companies? That this has been admitted should be cause for severe concern from PFS and CII members alike and needs urgent investigation.
You may also not be aware due to your recent tenure, but 55% of exam revenues which are deemed revenues of the CII entity are for exams provided to PFS members, as confirmed by John Bissell to me by email. That is a mighty chunk of revenue that isn’t accounted for in your point.