The Personal Finance Society (PFS) has been forced to delay its emergency board meeting as not enough directors from the Chartered Insurance Institute (CII) took part today (22 December).

Meanwhile, the CII has defended its position to appoint a majority of directors following uproar from across the industry at the move that has been labelled as a "coup d'etat" days before Christmas. 

The PFS had scheduled an emergency board meeting for today (22 December) to discuss the move by the CII to appoint three institute directors to sit alongside the current two CII directors, which together would make up the entire board.

This move followed a dispute that has been simmering for many months following initial moves to deregister the PFS by the CII.

However, in a press statement issued this afternoon, PFS president Caroline Stuart said "despite the presence of all of the member directors, and sufficient for a quorum, the meeting was rendered inquorate due to insufficient CII appointed directors attending to make a quorum".

"I am therefore seeking to rearrange this emergency meeting of the PFS Board as soon as possible and as an urgent priority," she added. 

The announcement by the CII yesterday has been met with stark reaction from the PFS and advisers throughout the industry.

Past presidents of the PFS accused the CII of a "deeply cynical move", while the current president, Stuart said the announcement came as a "huge shock".

"Having not informed our board of its intentions, the CII has acted unilaterally and without PFS leadership or member consent," she commented.

Meanwhile, advisers across social media have been keen to make their disapproval of the move clear.

Capital Asset Management chief executive Alan Smith said the announcement had "all the ingredients of a coup d'etat". He added: "The timing, days before the Christmas break appears to be deliberate, as was the press conference announced with only a couple of hours' notice".

CII responds to queries

Professional Adviser reached out to the CII who responded to a number of accusations that have already been levied at them in the past 24 hours.

When asked about the timing a spokesperson from the CII said: "The timing was initiated after the PFS was repeatedly made aware of its governance failures and after the PFS interim CEO said that mediation had failed at the Group CII Board meeting on 14 December, leaving the CII Group Board with no alternative but to take this action at this juncture."

The body also sought to dispel accusations that the move was for financial reasons. Alasdair Walker, chartered financial planner and managing director of Handford Aitkenhead & Walker, explained why people have such views.

He said: "The CII accounts show it has exhausted its member funds. However, there are around £19m of PFS member funds that it holds but cannot access.

"The only way that I understand CII can access these funds is to flood the PFS board, and force a vote to wind the PFS up," Walker said. "This threat has been present since PFS was established, and the CII previously attempted to deregister the PFS in 2021 for I think similar reasons."

He added that the CII must give members 30 days' notice for consultation, and "doing so two working days before most will break for Christmas makes an effective notice period of closer to 14 days. This is cynical at best".

The CII maintain financials have nothing to do with their decision to "flood" the board.

"We have been very clear about the reasons for this decision," said the spokesperson. "At the press conference we said this has nothing to do with the financials and that as always, the newly composed PFS board will continue to be mandated to focus entirely on protecting and serving the PFS's interests."

The CII said the new directors bring "fantastic experience" in governance, financial services and membership engagement and that it hopes with this "richer skill set" and "much-improved governance experience" the PFS will provide all of the services it needs to.

Impact on advisers

One of the primary reasons for adviser concern is many feel the CII does not understand the financial planning industry.

"If the CII are successful in their attempt, financial advice professionals will lose direct representation at their largest professional body," said Walker. "I have worked closely with the PFS and CII for many years as a volunteer in various roles, currently chairing the financial planning panel, and can say with confidence that CII leadership neither understand nor care about the PFS membership, further than their contribution to group revenues."

The CII sought to reassure the industry on this point.

"There is no change to any of the services received by PFS members," a spokesperson said. "The CII Group will continue to deliver, as normal, all PFS qualifications, exams, certificates, training, events, and statements of professional standing, as well as all operational functions, including marketing, HR and IT."

Taking action

Some advisers with deep-rooted concerns about the move have started to take action, with Smith going so far as to warn the "robust response" might mean the "CII's future as a solvent viable organisation" could be "under threat".

Walker is one adviser seeking to coordinate the activity and has launched a grass-roots member response.

On the website he asks people to: Make noise on social media so people are "aware this is a coup"; join the mailing list; and email Alan Vallance, the CEO of the CII, to "make it clear that the membership is deeply unhappy with this move".

Meanwhile, Yellowtail Financial Planning managing director and Chartered financial planner Dennis Hall said he will withdraw his support from the CII and look to solely keep his membership at the Chartered Institute for Securities & Investments (CISI).

"I have been a member of both professional bodies for several years," he explained. "As the CISI has gradually strengthened its financial planning proposition the CII seems hell-bent on destroying theirs.

"Having historically given so much time to the PFS, as well as paid my fees every year I cannot stand by and watch the CII crush this vibrant part of the organisation".

He went on to say the CII "couldn't care less about the PFS members" and "the only way to hurt them is to hit where it counts, their pocket".

"It would be a small step if I withdrew support, but if enough people did it, they might get the message," he concluded. "They are not the only game in town anymore."

Advisers on the other side

However, the advice industry is not unified in its disapproval of the CII's move.

PFEP Wealth Management managing director Richard Bishop noted the CII directors have a "duty to protect the company".

"There is much talk about the £20m the PFS holds, in real terms, it is controlled by the holding company the CII, it would break a swathe of company law and the associated director's duties if the CII simply ignored they have this money available to keep the CII solvent," he explained.

Bishop also believes there has been a "huge corporate error" that has been in place since it was set up in 2004.

"The PFS was set up on the basis the CII would have full control over the company, the PFS members' approach that it is owned by them is erroneous," he commented. Bishop added that members should be asking why previous presidents had not done more to protect the PFS and "make sure the CII's powers were curtailed".

"A simple agreement between the CII and PFS to stop any winding up, sale or movement of assets should have been instigated, to protect the PFS membership, however, it appears the finger of responsibility is only being pointed towards the CII," Bishop stated.

Seeking assurances

Benchmark managing director of wealth Ed Dymott also warned his firm was taking a careful look at the recent developments.

"The continued development of the financial planning profession is critical for both practitioners and customers alike," he said. "We need a professional body that represents its members, the wider profession and our consumers, and it is disappointing that the recent changes proposed by the CII appear to be focussed more on taking control of the PFS agenda, rather than supporting these needs."

"Going forward, we need a body that seeks to continue to improve our professional standards and reputation, and we want to work with a forward-thinking group who we believe best support our interests and those of our clients.

"We seek assurances that the CII strategy and plans remain in the best interests of our profession and welcome proactive engagement to understand these changes. We will only align with professional bodies who we believe are representing the interests of our profession."

Kathleen Gallagher is a freelancer journalist