Just a quick note to those who voted “no” to motions 1 and/or 2 at the AGM.
The board will have sent an email to you requesting anonymous feedback.
Please consider making the case for a managed separation / independence from the CII – we need to try and bring this topic to the front and centre of the board.
Furthermore, you may want to raise the unethical recent behaviour of the CII board, and the unsatisfactory arrangements whereby CII hold PFS “treasury funds” of £8.5M on their own balance sheet with no interest payable to PFS members.
One final point to note – Trevor Edwards, who is apparently the financial director of the PFS, was asked a question from the floor about the mutual status of PFS being under threat now that it no longer has a majority of member-voted directors. From his response in the room, and the wholly unsatisfactory answer provided, I would guess that this has never actually been considered by the CII board before flooding the PFS board.
First of all, a massive thank you to all who voted and/or attended the PFS AGM. If you didn’t get a chance, I have published the audio recording and full transcript on ourpfs – click the button below to read/listen. There are a few areas where the livestream cut out, and PFS have committed to publishing the video of the AGM online soon.
I understand that it is nearly unprecedented for the accounts to not be approved at a membership body, and it sends a powerful message to the CII that PFS members are watching, and that we reject their recent behaviour.
I have seen a few challenges from commenters on LinkedIn and news articles about recent events, summed up by comments from CII CEO and (inexplicably) CII-appointed director of PFS at the AGM:
“If [independence] is what PFS members want, that is possible, but I think it’s really important…to remember…so many of the things that PFS members value – Chartered Status, qualifications, the SPS, they are all delivered through the infrastructure of the CII.
Some commentators have, understandably, suggested that PFS members could vote with their feet – move to another body.
We currently have the choice of aligning with one of three vertically integrated parent bodies, each with a minor interest in financial planning:
The Chartered Insurance Institute, who believe they wholly own the PFS as a subsidiary – Total membership 120,000, PFS membership 40,000.
The Chartered Institute of Securities & Investments, a professional body for wealth managers and stockbrokers, who subsumed the Institute of Financial Planning in 2015 – Total membership 47,000, FP membership ~4,000
The London Institute of Banking and Finance, a professional body for the banking industry, do not publicly publish their membership levels. My guess would be the numbers are similar to or smaller than CISI.
I have no personal experience of LIBF, but I am also a Chartered Fellow of CISI, and hold the CFP, and whilst I greatly appreciate the work Sally, Chris and the team do for the benefit of financial planning, I do not believe the organisation has the collective will or interest to manage a large financial planning membership. I have no experience of LIBF so I can’t comment.
Let me be clear – I believe an independent body setup by financial planners and advisers for financial planners and advisers is the only viable future, and the PFS is the best and only vehicle with which we can achieve this.
In my opinion, the CII do not want to entertain PFS independence because they believe the £23M of PFS member funds belong to them, and they would “lose” this in a separation.
I have spoken to a number of former CII employees and executives who echoed this internal corporate view – that some past mistake in cost allocation meant that the PFS “unreasonable” accrued the large surpluses, and “by rights” it should be attributable to the CII.
Perhaps there is some truth to this – I don’t know, because I wasn’t involved in any of the contemporary discussions. Regardless, poor governance decisions from past CII boards and executives shouldn’t facilitate future corporate theft.
How would they do this? My best guess is that they will demand an unacceptably high “recharge” (as per image above) – say, £8-£9M next year, and similar numbers in future years.
The PFS board vote on these recharge amounts, and it is now majority CII executives.
Despite Matthew Hill promising at the PFS AGM that CII executives would recuse themselves from votes where they had conflicts of interest, it remains to be seen whether they consider such a vote a conflict. I am sure that members would, and I have informally consulted legal professionals who believe the same.
The solution – managed separation
I believe the way forward is simple – a managed separation, involving agreement between CII and PFS about an exclusive contract for services, as mentioned above, for a period of time of 2 – 3 years. This would ensure continuity of income for CII and continuity of service for PFS members, whilst giving us the autonomy and independence that is clearly needed.
There is an obvious need for a financial planning professional body to provide CPD tracking and SPS issuance, and to obtain an independent charter from the Privy Council, but I do not believe there is a need for vertically integrated qualification provision. It surely serves member interests better to look for best in class provision in these areas and avoid the conflicts of interest inherent in delivering them ‘in-house’.
If CII provide competitive and well-priced services for qualifications and training, PFS may well extend contracts on commercial terms. The important difference here would be that these decisions could be taken on their merits, rather than with a proverbial gun to the PFS board’s head.
This kind of separation would require the will, and the willingness to compromise for the good of members, from both the PFS board (the truly member-elected board) and the CII.
Finally, to enable PFS independence with the blessing of the CII, I think members need to be prepared to forgive a portion of the intercompany balance (currently around £8M). Here is how I see it – we either take a pragmatic approach to independence, or find ourselves watching as the CII slowly bleed the PFS of money over time.
Conclusion – Ready for an independent future?
If PFS members want to protect their professional body for the future, we will need act to secure it. This will almost certainly require a firm proposal of a serious alternative, put forward by the PFS board and supported by membership at an Extraordinary General Meeting.
I would love to hear from you if you think this is achievable or have ideas or plans that could help. I can’t drive this independent body concept alone, and I am sure that within my network and this mailing list, we have the collective will to make lasting change for the better.
Even if you don’t think it’s achievable, or don’t want it, I would love to hear from you – what are the issues? What alternatives do we have that I may have missed?
As always, thanks so much for everybody’s time and efforts.
