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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

Please sign this open letter to the PFS

Add your signature now

(Know other members who might want to sign this letter? Please forward this email on) Hi, it’s been a whole while since I wrote to you all.  Back in February, I wrote a letter to the PFS board. I felt it outlined the concerns of myself and other likeminded members and I asked for a reply, with the promise to publish the letter if none was received. A reply never came, and I was asked for a little more time, and not to publish. I mentioned the letter, and lack of response, at the recent PFS AGM last month and was, again, promised a reply. It has still not arrived. I am hoping that by publishing this letter and collecting signatures, I will spur the board into action. I really do think we can save the PFS, but it requires urgent changes to be made, and I believe it is in the best interests of all board members to push for these changes immediately.The letter follows, and is available in full at https://ourpfs.co.uk. Please send me an email at hello@ourpfs.co.uk if you would like to discuss further. -Alasdair P.S The opinions expressed in the letter are my own, based on my own research into the accounts of both bodies and conversations with others who are similarly concerned. There is sufficiently little information to be able to talk about hard facts, which is half of the problem!

Add your signature now

Open letter, 27th October 2023 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 on 2nd Feb 2023: 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…) 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:The PFS board must seek an immediate transfer of PFS funds to an account in the sole name and control of PFS.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. 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. Sincerely Alasdair Walker FPFS