Two Personal Finance Society (PFS) independent directors have resigned from the board of the professional body.
Both Vanessa Barnes and Gordon Wilson handed in their resignations notices today (21 June) due to their “significant concerns” regarding the independence of the organisation following moves by the Chartered Insurance Institute (CII) to take control of the organization.
Between them the pair served the PFS as non-executive directors for 11 years.
Barnes and Wilson are concerned about the future of the PFS’ £19m cash reserve if the body is closed down.
Both will propose a motion at the PFS annual general meeting in September to block the CII from gaining control of the funds.
The motion will propose that in this event, the reserves will be split up between its members (40,000) who would each receive £500.
Additionally, the CII “financial position has deteriorated significantly” as members cited the CII’s “steady erosion of reserves from £38m in 2016”.
The CII and PFS feud escalated towards the end of 2022, when the CII shocked PFS members on 21 December with an early Christmas surprise.
It appointed three new institute directors to the PFS board with immediate effect.
The CII also said it was aiming to form a majority on the PFS board, which it did.
Some PFS members at the time referred to this move as a ‘Christmas Coup’.
In Barnes’s resignation letter she said: “For many years, the enviable success of the PFS was built by dedicated executives, volunteers and a member-led board. Today, very worryingly, the PFS Board is led by a majority of employees of the Chartered Insurance Institute.”
She added this is “the same CII which, in recent years, has seen an exhaustion of its once-considerable reserves and assets, has failed to introduce new and relevant areas of study and has spent millions of pounds on an IT restructuring project that continues to fail in the delivery of a modern membership proposition”.
In its entire history, CII members had never held a majority on the PFS board which Barnes described as “de facto control”.
Wilson, also said: “Vanessa and I are both deeply disappointed at having to step down, but we feel we’ve been left with no choice.
“We both joined the board as volunteer, non-executive directors because we had deep respect and admiration for the work of the PFS, and because we wanted to give something back to the profession. The PFS has helped us greatly in our careers and in the growth of our businesses and we share the values of professionalism, integrity and trust.
“Over the past year, the CII has worked assiduously to gain effective control of the PFS and it has now manifestly achieved that ambition. We have fought hard on behalf of the PFS and its members, but the CII is now firmly in control and the PFS has lost its position as the voice of our profession.”
Barnes added: “If there are any moves by the current board to block our proposal from being put before the members, alarm bells should be ringing loudly amongst financial advisers right across the country.”
In a joint statement Alan Vallance, chief executive of the CII Group and Don MacIntyre, interim CEO of the PFS said: “The PFS board has today accepted the resignations of Vanessa Barnes and Gordon Wilson and we thank them for their service over many years. The remaining members of the PFS board met today to approve the appointment of new interim member directors, pending the outcome of a formal recruitment process that will begin immediately.
“Their appointment will ensure that the PFS board can meet in quoracy and immediately resume serving our PFS members, including investing the PFS reserves in ways which best serve PFS member interest including compliance with meeting the FCA’s Consumer Duty regulations.
“As has been repeatedly stated over the past 12 months, there is no intention or value in deregistering the PFS. Ensuring good governance is in place across the group has always been our priority, and the CII will continue to support the actions the PFS board considers necessary to ensure compliance with corporate governance best practice. We look forward to the PFS board now channelling all its energy and resources into building a strong future for PFS members.”
