National and network bosses and trade bodies are a step closer to hammering out a protocol over client ownership, a year after Towry’s High Court battle with Raymond James thrust the issue into the limelight.
A 20-member group including representatives from Tenet, St James’s Place, Raymond James and Intrinsic have agreed on a working draft, which has now been sent to lawyers Pinsent Masons and Faegre Baker Daniels for scrutiny.
The Tax Incentivised Savings Association (Tisa) set up the group and said the current draft was ‘very high level’, with debate still raging about the details, but that it expected to issue a protocol within six months.
Tisa policy director Malcolm Small (pictured) said the agreement would be principles-based, but contain some prescriptive detail over some issues, such as the amount of time advisers should wait before contacting ex-clients after they have moved to a new job.
Members of the group are divided over that issue, with opinion split between a three- and six-month requirement. ‘There is a divergence of views, with some people saying it should be six months while some think it should be three… I think it’s steering more toward three than six,’ said Small.
Agreement on a draft protocol comes a year after Raymond James’s victory over Towry in the High Court, after Towry had accused it of client solicitation. The case focused on whether seven advisers formerly at Edward Jones, which Towry bought in 2009, breached Edward Jones’s restrictive covenants when they joined Raymond James, later advising former clients.
In the aftermath of that victory, Raymond James called for an industry-agreed protocol on restrictive covenants. It had proposed that the UK adopt a US agreement, but the Tisa-led group rejected that approach.
‘The protocol from the US unfortunately had too many references to conditions in the US market. We gave it careful consideration but decided at the end of the day to prepare one specifically for the UK market,’ said Small.
Gill Cardy, managing director of IFA Centre, which is part of the group, said she was seeking to ensure the agreement protected small IFA firms, unlike the US protocol, which she said was drafted with the interests of larger institutions in mind.
‘I am trying to make sure [the protocol] protects the interests of smaller firms, where losing a member of staff could have much bigger impact then at a firm like Merrill Lynch.’