Cover story: Can the CII find calmer waters? – Money Marketing

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The CII has tarnished its heritage with technical issues in exams, claims of overspending, a perceived failure to deliver on promises and tension with the PFS. Get a grip, say experts
Stories about the Chartered Insurance Institute (CII) never fail to spark the attention of Money Marketing readers. The CII’s certifications are regarded as the gold standard in the financial advice profession.
The royal charter too confers a certain prestige on the professional body, but also the requirement to “secure and justify the confidence of the public”.
It is precisely on this last point that the CII, which has 125,000 members, may have fallen short in recent times.
‘Insurance institute’ is the wrong title for most of the UK’s advisers
Certainly, the organisation has faced no shortage of critical media stories since its foundation in 1897.
Yet negative coverage has become more acute since the beginning of the pandemic, with a series of technical issues during exam sessions and perceived failures to deliver on the promises announced in the 2016 manifesto.
Exam and IT problems
As Covid-19 started spreading and lockdown measures were announced across Europe, the CII postponed its exams before eventually bringing them online.
Since that point, IT issues have been flagged up in the trade press on a regular basis.
Money Marketing reported on them for the first time in August 2020 after several candidates, who were sitting remotely invigilated, written exams, experienced technical issues.
We will continue to invest in IT on a cost/benefit basis
The CII apologised in October 2020, offering a free re-sit to those who had failed an exam during the period, while also highlighting that the majority of the 18,500 July and October exams had been completed without incident.
The following year a website crash occurred, on 29 October. The CII confirmed the outage had not been a cyber-attack and no breach of information had taken place. However, the incident happened on the day the results of the R06 exams were meant to be published.
More recently, in June 2022, the CII had to delay the issuing of “a small number” of statement of professional standing certificates. In addition to the technical problem itself, advisers complained about the lack of communication from the agency.
The CII has failed to modernise — for both the exam reading material and the way exams are carried out
As the IT issues continued, sources speculated the CII might have exceeded its tech budget; in fact, they suggested the body might have overspent the IT budget, set in its 2016 manifesto, by at least four times. The figure was initially agreed at £4.4m, according to internal sources.
The CII denied the claim of overspending and referred to its annual general meetings and annual reports.
A spokesperson told Money Marketing: “As is normal with any major IT transformation, the changes are implemented over time and therefore the benefits of the changes will be realised in accordance.
“We did change some priorities because of Covid; for example, by implementing online and remote invigilation to enable members to continue to sit exams during the pandemic, and because of the uncertainty around how long, how frequent and how impactful lockdowns would be felt globally.
They claimed to save costs at a new office, then moved out just two years later
“The manifesto committed to review and modernise the CII’s ageing and complex systems and we will continue to invest in IT on a cost/benefit basis.”
‘Road to financial recovery’
The CII announced in May it was “on the road to financial recovery”. Its 2021 financial statement showed it had made an operating profit of £3.3m in 2021, compared to a £4m loss in 2020.
The professional body put this reversal down to the “collective efforts” of members, students, corporate customers, volunteers, trustees and staff.
There was a £2.2m increase in revenue from qualifications and educational activities in 2021 as insurance and personal finance professionals sought to develop their knowledge and skills.
They receive a lot of revenue but have not delivered much
Local institutes opted to voluntarily utilise their reserves last year, before taking additional grant payments.
The CII said this further aided the financial recovery of the professional body.
The statement also showed CII staff reduced operating costs by £5.17m in 2021.
Office move
Another significant cost saving was generated by the move from two offices to one hub at 20 Fenchurch Street in early 2021. Yet the decision to sell the heritage building has not been welcomed by everyone.
Insurance Institute for Shropshire and Mid-Wales deputy president and former Personal Finance  Society (PFS) chartered ambassador Robin Melley says: “In 2017 the official reason for selling the CII’s heritage head office was to allow for investment in the modernisation of the institute.
“But, now that the £21m has all been spent, along with the CII’s previously healthy cash reserves, the narrative for selling Aldermanbury has changed.
The CII’s statement to change from its previous strategic path is welcome news
“Whatever the ultimate reason, it was a poor and irreversible decision which has seen the CII surrounded in ongoing failings, negative press over numerous issues, and a breach of members’ confidence and trust in its openness and honesty.
“They claimed to save costs by moving to a new rented self-contained office in 2019, then moved out just two years later in favour of 52 rented desks as a sub-tenant of the Chartered Institute for Securities & Investment.
“It’s difficult to see how anyone can consider this as anything other than a failure and regression…hardly a legacy to pass on to the next generation!”
Syndaxi Financial Planning managing director Robert Reid believes there were few reasons for the CII to keep its headquarters in London.
Ongoing change offers another 125 years of opportunity if it listens and gets its act together
He says: “There’s already a lot of people working from home; the executive level should do the same.
“If they need an office, even for a limited number of people, they would be far better with it somewhere in the regions, such as York or Manchester.”
Financial milestone
Another financial milestone in 2021 was the decision to proceed with the buyout of the organisation’s defined benefit (DB) pension scheme.
The first step of this process, completed last year, was an initial buy-in of £6.6m.
As a result of a tax provision plus the £6.6m DB pension cost, the CII Group reported a total deficit of £4.4m for 2021.
CII sources, however, in June told Money Marketing the financial situation of the organisation might be less rosy than it seemed.
The CII must demand a base mathematics qualification for any registered adviser
They claimed the professional body could have lost between £5m and £7m last year, and its current liabilities were £2.373m.
According to the sources, the CII might be “hiding” behind the success of the PFS.
Although the PFS publishes its annual report and accounts as an independent entity, the CII does so as a consolidated organisation. In other words, the CII does not offer a breakdown of the entities under its wing.
At the time of writing, the PFS had not made its accounts for 2021 publicly available.
Its operating surplus is understood to be £3.369m. This could mean the CII, as a separate legal entity, in fact made an operating loss in 2021.
Relationship with PFS
The intricacies between the two organisations seem to extend beyond financial statements.
There have been media reports of the CII attempting to de-register the PFS, allegedly to get hold of the latter’s funds.
The most valuable learning can often be the hardest learnt
The same reports assume this move led to the resignation of Keith Richards, the last permanent chief executive of the PFS.
A source close to the PFS told Money Marketing: “We know that Keith Richards made clear his position regarding de-registration and the future of the PFS following two failed attempts by the CII.
“They clearly chose to test him with a third attempt in 2021, deliberately leaving the PFS without a prominent leader.
“In fact, the CII chose to retire the role of PFS CEO to gain control and replace it with a CII chief membership officer, presumably banking on the fact they would get de-registration through much easier.”
To date, this information has not been confirmed by Richards, while the role of CEO of the PFS has been reinstated. Don MacIntyre was appointed as interim CEO on 16 August, as previously announced.
A member of our staff was taking an exam where they couldn’t get logged in. They were given a telephone number in the US
As the PFS expressed its intention to reinstate the role of CEO, Richards welcomed the news.
He said: “I believe the personal finance sector evolved into a recognised profession post-Retail Distribution Review.
“And the PFS played a key role as its dedicated and independent professional body, which would not have been achieved without a dedicated board and executive leadership.
“I am therefore delighted that the membership have overwhelmingly voiced their views and forced the reversal of a poor decision.”
After 18 years of collaboration, the CII launched a consultation on its relationship with the PFS, among others. It published its findings in February 2022.
While some CII members favoured the PFS having greater autonomy, the majority wanted it to stay within the group.
The feedback summary in the consultation stated that personal finance participants identified advantages to maintaining the status quo. That included economies of scale provided by a shared operational infrastructure and access to CII exams.
The advice sector was rooted in the insurance industry, born from selling insurance products. That is no longer the case
Yet Melley questioned the validity of the consultation.
He tweeted: “With more than 99% of the @CIIGroup membership NOT responding to this consultation, how on earth can you draw any reliable conclusions as to what the membership want and how the CII should attempt to build back better — surely they first need to understand what went wrong?”
Challenge to authority
Several prominent PFS members have challenged the CII’s authority.
In June 2021, a group of former PFS presidents launched a rebellion against the CII with the establishment of the PFS Solo website. The group tried to mobilise adviser members to weaken the CII’s control of the PFS during the CII AGM. Again, this was because of the CII’s attempts to de-register the PFS as an independent entity.
A newly qualified base-level adviser should not be allowed responsibility for a person’s £1m pension or savings — that is irrational
Despite the calls for more autonomy for the PFS, both organisations recently stressed their commitment to keep working together.
Need for reform
Richards is not the only one to have left the PFS in recent times. Melley resigned from his position as chartered ambassador in June.
In an email to the local institute council members, he provided a list of reasons that had led to his decision. One of them was the lack of transparency from the CII over financial matters.
Melley wrote: “On behalf of the Local Institute Network Forum, its vice-president has been asking for a clear financial statement from the CII that gives a breakdown of the CII consolidated accounts to show the true underlying financial position of each component part (i.e. the CII itself, the PFS and the Hong Kong CII) for each year since the 2016 manifesto launch.
The CII should qualify advisers to advise on income in retirement, in the same way that equity release or mortgages need separate qualifications
“The vice-president’s request, which only reiterates numerous earlier requests from members, has so far been refused.
“Given that this information is already available on the CII’s accounting system and can be very quickly and easily reported on, the fact that they refuse to be transparent and accountable to the membership on this issue only serves to fuel suspicion that the CII board and their executive have something to hide over their financial affairs.”
In terms of transparency, Reid would like the CII to become more member centric and communicate better with the membership.
He says: “They have diverted themselves over the past five or six years to focus on a range of projects.
“Although they receive a lot of revenue, they have not delivered much. You also see a lack of interest when you are asking them anything.”
The royal charter confers the requirement to secure and justify the confidence of the public
Melley also shared his disagreement with the CII qualification’s framework. He said the “gaping holes” in the framework still existed and would not be addressed until 2024.
Melley added this was a failure to deliver on the promise to update the qualification’s framework under the mantra of “modern, relevant and diverse”.
He said: “As a qualification awarding body, shouldn’t qualifications be the one area that the CII is excellent at?
“But the member consultation also highlighted that the CII was out of touch.”
Lockhart Consultancy director Stewart Lockhart says other organisations offer “more modern, more user-friendly and more up-to-date” studying material and exams for advisers.
“The CII has failed to modernise itself. That is true for the exam reading material, but also for the way exams are carried out,” says Lockhart.
They have diverted themselves over the past five or six years to focus on a range of projects
This is also the view of Chancery Lane CEO Doug Brodie, who says: “Given that everything an adviser does with any client involves numbers and calculations, the CII must demand a base mathematics qualification for any registered adviser.
“Maths competency must be assessed.
“Due to the potential size of client pension funds and the absolute importance of correct investment in retirement, the CII should qualify advisers to advise on income in retirement, in the same way that equity release or mortgages need separate qualifications.
“The CII should cap the size of investment an adviser may advise on according to both qualification and experience. A newly qualified base-level adviser should not be allowed responsibility for a person’s £1m pension or savings — that is irrational.”
Brodie observes that the name of the institute is not reflective of all the professions it represents.
He says: “The advice sector was rooted in the insurance industry, born from selling insurance products. That is no longer the case, so an ‘insurance institute’ is the wrong title for the majority of the UK’s advisers.”
You see a lack of interest when you are asking them anything
Lockhart adds that the CII’s standard of customer service has room for improvement.
“A member of our staff was taking an exam where they simply couldn’t get logged in. They were given a telephone number in the US to contact,” he says.
Another adviser recently flagged up that they had had to wait 45 minutes on the phone to get an update for their study books order.
All change at the top
As the PFS looks for a new CEO, so the CII is about to see a change at board level too.
As Money Marketing went to press, interim chief executive Jonathan Clark was due to step down on 30 August. Former Royal Institute of British Architects CEO Alan Vallance was set to join the CII to replace him.
In a report published in July, the CII set out its plans for the year ahead. The report will also serve as a framework for the development of the organisation’s next five-year strategy.
The CII has pledged to change the assessment method for the R06 financial planning practice qualification.
With more than 99% of the @CIIGroup membership NOT responding to this consultation, how on earth can you draw any reliable conclusions as to what the membership want
This is not the only change the CII has in the pipeline for its qualifications. The professional body aims to pilot changes to the way qualifications are delivered. These will include a digital qualification format to be offered for international qualifications.
A professional ‘map’ will also be launched with the aim of helping professionals and employers to self-assess knowledge and skills gaps. It will then enable them to find ways to fill those gaps.
The CII will engage with practitioner advisory groups to design qualification structures for this tool’s evolution, it says. The measures — set out in the ‘Shaping the future together’ consultation — should be implemented by July 2023, while a plan for the next five years will be published in early 2023.
‘Most valuable learning’
Richards says: “The CII’s statement to change from its previous strategic path is welcome news as it should be recognised that it has a long and illustrious heritage spanning 125 years as a professional ‘qualifications’ body.
I am delighted that the membership have overwhelmingly voiced their views and forced the reversal of a poor decision
“The ongoing change and needs within the distinctly different and recognised sectors of both insurance and personal finance will offer another 125 years of opportunity — if it listens, gets its act together, doesn’t over-engineer its role and delivers relevant qualifications for both professions.
“The CII’s commitment in 2022 to reform, following member and market consultation, is welcome given the controversy and performance of the past year.”
Richards adds: “But the most valuable learning can often be the hardest learnt.”
30 August 2022: CII interim chief executive officer Jonathan Clark steps down. Alan Vallance joins the professional body to replace him
End of summer 2022: Appointment of new CEO at the Personal Finance Society
Early 2023: Announcement of a five-year plan
July 2023: Implementation of all measures set out in the ‘Shaping the future together’ consultation
1897: Year of foundation
125: Years of existence
125,000: Number of members
£3.3m: Operating profit in 2021
£2.2m: Increase in revenue from qualifications and educational activities in 2021
1: Number of offices, since relocating from two offices to one hub, at 20 Fenchurch Street, in early 2021
This article featured in the September 2022 edition of MM. 
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There are 2 comments at the moment, we would love to hear your opinion too.
The Chair of the CII needs changing along with most of the tainted CII executive if the new CEO has any chance of bringing stability, focus and a reversal of fortunes and reputation!
A modern day fiasco and ultimately a scandal for both the Insurance and Personal Finance Professions who have been under served and unprofessionally represented by the performance and behaviours of the CII.
Good Luck Mr Valance and hope you are up for the challenge!!
I agree with Mr Hopewell. But in truth I do not think the CII is worth saving in its current form.
If the place had been run properly, PFS members would have had large cuts in their membership fees. Instead it turns out that we have been funding CII’s overspending and massive salary bill for years.
Time to set up on our own perhaps ?
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