The Chartered Insurance Institute (CII) has insisted a series of “serious governance risks” at the Personal Finance Society (PFS) left it with “no alternative” but to step in.
Among the failures listed were a “lack of collective decision making” by the PFS board and a “failure” to act in line with the articles of association approved by PFS members.
A spokesperson for the CII Group told Money Marketing other failures it identified were:
- 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, which has led to significant expenditure on external advisors 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
“These failures were repeatedly raised with the PFS, but they were neither acknowledged nor acted upon,” the spokesperson said.
“Accepting these serious governance risks was not acceptable to the Group’s board, which was left with no alternative but to act decisively in the best interests of members.”
The CII Group has announced it will appoint a majority of directors to the PFS board, after independent mediation failed.
It yesterday (21 December) announced the appointment of three new institute directors to the PFS board with immediate effect.
After a 30-day consultation period has elapsed, the CII Group board said it intends to form a majority by appointing a further institute director to the PFS board.
It said it does not intend to provide any further comment.
Behind the Headlines: CII/PFS saga – questions remain unanswered
The PFS has condemned the CII’s decision.
PFS president Caroline Stuart said the decision by the CII board, which was announced to the PFS board, the membership and the wider insurance and personal finance communities this morning (21 December), 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 said in a statement.
Former president Sarah Lord has slammed the CII for its “aggressive” takeover of the PFS board, calling it a “deeply cynical move”.
Lord served as PFS president for two years between 2020 and 2022. She was recently succeeded by Stuart.
She said: “This is a deeply cynical move by the CII and the orchestration of the announcement that we have witnessed today shows that this is a premeditated decision.”
Another past president of the PFS, Garry Hale (2012–13) said: “I am shocked, stunned and angered that the CII has chosen today to take the harmful and cynical decision to announce its intention to ‘flood’ the PFS board with CII nominee directors.
“The timing of this on the eve of Christmas celebrations is a blatant attempt to avoid scrutiny, avoid CII/PFS member backlash, avoid journalists’ questions and prevent regulators and politicians from actively understanding or mediating the decision in the full knowledge that the majority of the members, sector journalists and regulators will be off work and with their families, in many cases for the first time in three years.
“I would urge all PFS members to speak out and raise any concerns they have about this potentially damaging move.”
Comments