The Chartered Insurance Institute has denied that its move this week to take over the PFS board was about taking control of the PFS's near £20m in reserves.

Chris Shadforth, communications director at the CII, said the takeover of the PFS board was not about money. 

He added that the PFS had made "super normal" profits over a number of years and built up healthy reserves because nearly all its services were provided by the CII at a relatively low cost.

He said: “The decision of the CII group board to appoint additional directors to PFS Ltd will not result in cash being moved from PFS Ltd to any other company within the Institute’s Group of companies in any way different from now. Money already flows between the companies in order to pay for the services PFS members receive from the group.”

“The PFS profit and loss account includes PFS membership fees and a recharge from the CII for central services provided. The PFS does not pay for the full cost of providing these services. Nor has the PFS paid for any of the costs related to the pandemic, any of the recent (and significant) IT investment costs, the cost of running exams or the cost of providing Chartered status and Statements of Professional Standing to PFS members.

“As a result, the PFS Ltd company has effectively made super-normal profits every year and the CII Ltd entity has been wearing losses to fund this result. This needs to be redressed going forward.”

The CII appointed three new board members to the PFS board this week in an attempt to take control of its subsidiary, citing concerns over governance.

The PFS responded that that the President and CEO of the PFS were not notified about the appointments until the morning of the announcement and shared its dismay at how members were informed via a membership email not seen by the PFS President and CEO before it was sent.

The PFS is a subsidiary of the CII, and its articles of association give the CII the right to appoint directors to the PFS board. The two organisations have been at loggerheads for some time over the structure and direction of the PFS. Last year the CII axed the role of PFS CEO (held by Keith Richards) but this year did a U-turn and reinstated the role.

The PFS board is currently made up of five PFS member director and two institute directors, with the CII appointing three further institute directors which it said will, “equalise the PFS board with immediate effect.” The CII then plans to appoint another director giving it a majority on the PFS board.

The CII said it intervened at the PFS due to concern over governance issues. CII CEO Alan Vallance said that the PFS had set up new committees without CII approval and also held meetings without informing CII directors who were entitled to attend. 

• A group of PFS members has launched a campaign called 'Our PFS' to fight the CII's full takeover of the PFS board: https://ourpfs.co.uk/