A group of independent financial advisers have seen their case over a contract which restricted them from contacting their clients dropped.
Five advisers had been taken to court by Affinity Financial Awareness over a clause in their contract preventing them from soliciting business from the company’s clients.
Affinity, which was bought by Wealth at Work earlier this year, has now dropped its case against three of the advisers after the judge ruled against it for two of them.
Jonathan Watts-Lay, director of Wealth at Work, said: “The judge said that for a couple of advisers who were under one contract, that wasn’t enforceable, because the restriction was too broadly defined.
“He hadn’t decided on the other advisers but over the last 24 hours we decided there was no point continuing. To save any more angst on it we have just withdrawn it.”
He said he was “disappointed” with the decision but pointed out that the contracts were drafted years ago by Affinity, which his company only bought in May.
Under their contract advisers could not, within a year of the agreement being terminated, solicit or canvass the custom of Affinity’s clients or any potential clients.
Affinity alleged that the advisers broke these restrictions by approaching the company's clients.
Nor could they employ, offer to employ or enter into partnership with one of the company’s “restricted representatives”.
While five advisers were taken to court by Affinity, a further 22 were affected by it.
Affinity had also been withholding money owed to the advisers while the case proceeded and Mr Watts-Lay said this would now be paid.
Until recently, Affinity's advice has been provided through self-employed advisers operating under consultancy agreements.
Wealth at Work's advice was delivered through employees, rather than self-employed advisers and it decided Affinity’s advice should also be delivered in the same way.
It offered contracts of employment to some of its advisers, but not others.
During the court case, the advisers’ barrister told the court that since the takeover Affinity had focused on selling Wealth at Work’s bespoke discretionary funds and that advisers had been “heavily incentivised” to persuade their clients to switch their holdings to its platform.
Wealth at Work said these claims were “inaccurate and scurrilous” and that it was “simply not true” that the advisers were no longer independent.
Mr Watts-Lay said: “We are an IFA and we are also a discretionary manager.
“The number of assets under management and assets under advice we have are about 50/50. There are a lot of clients we have that sit with third party products.”
The advisers’ spokeswoman has been contacted for comment.
