The Chartered Institute of Insurance (CII) has revealed a list of the “serious and significant” governance failures it alleges occurred at the Personal Finance Society (PFS) which prompted it to launch a takeover of the body earlier this week.
An emergency PFS board meeting yesterday was also cancelled after the CII appointees did not attend, however the CII confirmed its appointees will attend the rescheduled meeting in the New Year.
The CII also rebuked the PFS for allegedly breeching board confidentiality in releasing details about the board’s business.
The emergency meeting was triggered by the CII’s move to take control of the PFS by appointing a majority of directors to the PFS board, for which it gave the PFS CEO 15 minutes notice, after citing “serious and significant” governance failures.
The CII Group board has now published a range of issues it identified that include, but are not limited to:
- a failure to act in line with the Articles of Association 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.
The CII claimed these failures were repeatedly raised with the PFS, but they were “neither acknowledged nor acted upon”.
Accepting these serious governance risks was not acceptable to the CII’s group board, which was left with no alternative but to act decisively in the best interests of members, it added.
Health & Protection has contacted the PFS about the allegations but was told it would not be commenting further until the New Year.
Insufficient CII members attending
In a statement released yesterday the president of the PFS revealed she was seeking to rearrange an emergency meeting of its board as soon as possible after insufficient CII appointed board members failed to attend to make up a quorum.
PFS president Caroline Stuart revealed the emergency meeting which Health & Protection reported would be taking place did not proceed due to insufficient members attending.
This is despite the bodies appearing to come to an understanding in September to end the long-running dispute.
Earlier in the week, Garry Hale, PFS president between 2012 and 2013, attacked the timing of the CII’s move on the eve of Christmas celebrations as a “blatant attempt to avoid scrutiny, avoid CII and PFS member backlash, avoid journalists’ questions and prevent regulators and politicians from actively understanding or mediating the decision.”
For her part, Stuart confirmed the PFS was scheduled to hold an emergency board meeting yesterday following receipt of the CII’s notice of its intention to appoint the three institute directors.
“This intention would mean the CII gains indirect control over the PFS board and PFS assets,” Stuart continued.
“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.”
Health & Protection contacted the CII to find out if it instructed its appointed members not to attend the emergency meeting.
In response the CII spokesperson said its newly appointed Institute directors have all confirmed they can attend the scheduled PFS Board meeting in January, and provided their availability for several different dates, should the PFS board want to meet.
“However, sadly, the statement issued by the president of the PFS board… was another contravention of board confidentiality,” the spokesperson continued.
“We have written to the president of the PFS board to express our concern.”
