CII chair Helen Phillips on the PFS: 'We were sadly left with no choice'

The Chartered Insurance Institute's (CII) decision to appoint three directors to the Personal Finance Society's (PFS) board in a surprise move late last month was "not an outcome the board wanted or pursued", according to its chair Helen Phillips.

In a statement yesterday (5 January) following the resignation of PFS president Caroline Stuart, Phillips said it was crucial the CII reiterate the governance failures it has accused the PFS of are "not baseless or without foundation".

When announcing the appointment of the three board members on 21 December, the CII outlined what it perceived to be several key failures it said had been "repeatedly raised" to the PFS and ignored.

These included:

• A failure to act in line with the Articles of Association (AoA) approved by PFS members;
• A lack of collective decision making by the PFS board;
• The exclusion of institute-appointed directors from PFS board meetings and decision-making processes;
• The inappropriate establishment of at least one sub-committee, which is directing work without proper authority from the PFS board or input from the CII as required under the PFS board's terms of reference.
• A group of PFS board members pursuing actions without full board authority that have led to significant expenditure on external advisers that is substantially above agreed limits;
• The PFS board seeking to exclude the CII group audit and risk committee from oversight of audit and financial statements;
• The PFS board reappointing expired board members by co-option rather than rotating the membership of the board.

Drawing attention to these points in her statement, Phillips said: "The CII group board was sadly left with no choice but to address these failings and take this action after its December board meeting. "Not only was this in the best interests of all PFS and CII members, it is also consistent with the general duties conferred in law on all company directors, as well as in the PFS AoA."

She added: "The CII group board recognises that PFS members have important questions about the appointment of further institute directors, and we will ensure further opportunities are provided for them to be asked and answered over the consultation period. 

"It is essential that PFS members are now consulted, and CII staff are already supporting this exercise as part of their normal, professional service to the PFS board and members."

CII finances

The ambiguous state of the CII's financial position - a central debate in this ongoing saga - was also addressed by Phillips yesterday following Stuart's assertions in her own resignation statement that the CII's precarious finance were a "disastrous combination of arrogance, complacency and misguided business priorities".

Phillips referenced the CII's buying out of the group pension fund with its central reserves and said the institute left "PFS and other company reserves untouched".

"This is good business practice and was discussed in detail at the organisation's recent annual general meeting (AGM), along with the need to establish a new recharge model that fairly reflects the costs of delivering PFS member services, which is recognised by both CII chief executive (CEO) Alan Vallance and interim PFS CEO Don MacIntyre," she stated.

"There has been no change in that position since the AGM."

De-registration of the PFS

Concerns around the de-registration of the PFS are also untrue, Phillips said, adding that the CII "wants to see the PFS flourish as a professional membership body".

"The CII board remains deeply committed to its PFS members and, for the avoidance of doubt, there is no plan whatsoever to deregister the PFS. The CII will continue to deliver, as normal, all PFS qualifications, exams, certificates, training, events, and the statements of professional standing."

Read more: Everything you need to know about the PFS/CII power struggle