Former Personal Finance Society board director Vanessa Barnes has written to the current board laying out her concerns about the Chartered Insurance Institute’s finances and a string of resignations in its senior team.
In an open letter to PFS board chair Andy Briscoe, she said both CII Group’s 2022 report was “concerning”.
She also expressed worry over the impending departures of CII Group chief executive Alan Vallance and finance director Trevor Edwards, as well as the recent departures of its chief operating officer John Bissell, professional standards director Melissa Collett and human resources director Caren Thomas.
Barnes said she is “aware” of the recent open correspondence regarding the PFS reserves.
But, she said, in all of the responses there has been a “singular failure” to address why the CII continues to hold £10.8m of PFS members’ funds rather than transfer it to the PFS bank account holding £10m.
In response to the letter, a CII spokesperson said the CII Group accounts for 2022 were signed-off by independent auditors on 31 July 2023.
“The auditor issued an unqualified audit report. This includes their conclusion related to going concern that they ‘have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going concern for a period of at least 12 months from when they were authorised for issue’,” the spokesperson added.
“The CII Group accounts recorded a net surplus of £2.2m in its financial year 2022, similar to 2021, with total funds rising to £30.6m.
“The cash and short-term deposits held by the Institute at the end of 2022 (£14.295m) was more than sufficient to cover the (£10.858m) PFS intercompany debt and continues to be so; the institute maintains a cash balance at all times in excess of the PFS intercompany debt it holds, which is monitored by the PFS board.
“The remainder of the PFS reserves are held directly by the PFS.
“The consolidated and institute statement of financial position table on page 29 of the report indicates that the institute had net assets (reserves) of £9.550m at the end of December 2022.
“That is net of all liabilities, including the PFS intercompany debt. This figure is higher than at the end of December 2021 (£9.338m).”
In her letter, Barnes also wrote that the PFS board is now “saturated by CII-appointed directors”.
“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,” she said.
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She asked board members whether they had asked for the remaining funds held outside of the designated PFS account to be transferred to the PFS account.
She also questioned if the current PFS board considered whether a receiver or 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,” she said.
Barnes said 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,” she added.
These include issues with the long-term investment fund “not being treated as a long-term investment”, the values of CII current and non-current assets, and the fact that the statement of going concern refers to the group rather than the institute.
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Earlier this month, PFS interim chief executive Don MacIntyre outlined plans to give members more information and improve transparency.
Barnes said providing direct, detailed answers to her questions would be “a good starting point”.
