Under the PFS' articles of association the CII does not require a board vote to make an appointment to the board, but any new PFS member director has to be approved by PFS members at an AGM and ratified by the board.
The articles of association says: “The board shall comprise of up to eight member directors, up to two lay directors, and such institute directors as the institute see fit, provided that the aggregate total of member directors and lay directors shall not exceed eight.
“The institute directors shall have the right to form the majority of directors on the board. A member director shall be a full member of the society who has as a minimum attained Dip PFS or has equivalent qualifications, or otherwise qualified in accordance with any by-laws of the society.
“Any resolution to amend this article shall require a 75 per cent vote in favour of the amendment by the members who are voting at a general meeting.”
To remove any director from the board also requires a majority board vote of 75 per cent.
Reserves held by the PFS and the inter-company loan arrangement between the CII and the PFS has been an ongoing subject of conflict.
Sarah Lord, a former president of the PFS, says her biggest fear following the new board appointments, is that “before too long” the PFS will not continue to exist and will have been subsumed into the CII and that the 30,000-plus financial planning and advice professionals will not have the appropriate support from a membership body.
“My biggest concern is how will the CII manage the clear conflict of interest that exists on the board, appointing four senior employees to the board, and now having a significant majority means that there is a real risk that the PFS member directors will not have a voice at the table and will not be able to represent the PFS members interests.”
According to the CII's consolidated financial statement for 2023, last year the institute paid £2.5mn (2022: £10mn) to the PFS to reduce its intergroup indebtedness to the PFS.
This, the CII reported, had increased the total transferred from the institute to the PFS over the past two years to £12.5mn.
A CII spokesperson said: "The CII always keeps cash or cash equivalents in excess of the sum of intragroup debt, so all funds are available to the PFS board at all points in time."
In the PFS' latest accounts for 2023, published in September, its net reserves stood at £19.1mn, an increase of 11 per cent from the previous year. The debt owed to the society was £8.1mn. In 2022 it was £10.9mn.
