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Court hears adviser claims are 'inaccurate and scurrilous'

Court hears adviser claims are 'inaccurate and scurrilous'

"Inaccurate and scurrilous" claims that Affinity Financial has ceased to provide independent financial advice since its take over by Wealth at Work are "simply not true", the High Court has heard.

The firm's barrister, Thomas Croxford, said it was providing sound advice to its customers across a wide range of products, just as it had always done.

And he rubbished claims by five former Affinity IFAs that restrictions in their contracts are unfairly preventing them from making a living.

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They worked on a self-employed basis for Affinity until July but departed after the firm was taken over by WAW.

Restrictive covenants in their contracts banned them from soliciting or canvassing Affinity's customers with whom they had dealt in the year before their departure.

Affinity, which now directly employs all its advisers, argues the restriction, which lasts until July 2017, is a reasonably means of protecting the goodwill in its business.

Mr Croxford said there was nothing objectionable about Affinity having a year's grace to transfer goodwill to its in-house advisers, 

But the five say the covenants are an unlawful restraint on their freedom to trade, not in the public interest and simply unenforceable.

Mr Croxford told the court Affinity IFAs had only ever been permitted to sell products that had been "researched and approved" by the firm.

And, since WAW take over, the firm was "not acting any less independently" when selecting products for clients' portfolios.

Explaining the court action, Mr Croxford claimed that it "became apparent" after the five's consultancy agreements were terminated that they "had breached or were threatening to breach" the covenants.

Customers were, he alleged, led to believe that "Affinity had ceased to exist as an IFA and had been replaced by a 'restricted' adviser, WAW."

And he told the judge: "This was simply not true but resulted in many customers seeking to move their business" to the five's "new entitities".

Affinity, he added, had "sustained substantial loss of business from clients serviced by the defendants, and introduced to them by Affinity, from July onwards"

"In short, the defendants and other advisers were seeking to take Affinity's customers with them, regardless of the covenants", he claimed.

A temporary injunction was issued against the five on September 9, but one of the issues is whether that order should be extended to July 2017.

Mr Croxford said comparisons between Affinity's business model before and after the take over were simply "irrelevant" to the question of the covenants' enforceability.

"Even if the allegations as to the changes in investment advice to be given to clients or service to be offered by Affinity were accurate - and the defendant's allegations in this regard range from inaccurate to scurrilous - this can be of no relevance to whether the covenants were unenforceable restraints of trade when entered into," he told the judge.

He added: "The covenants are justified because a customer will naturally repose trust in the individual through whom Affinity has provided its services, and that Affinity needs time to transfer this good will to another of its advisers.