View the article online at http://citywire.co.uk/wealth-manager/article/a744058
Charles Stanley defence shows clash at Brewin Leicester arm with head office
by James Phillipps on Apr 03, 2014 at 14:55
A 41-page defence document filed in the High Court battle between Brewin Dolphin and Charles Stanley lays bare years of tension between six former employees of Brewin’s Leicester branch and its London HQ over head office policies.
The six quit Brewin last March to join Charles Stanley and launched a Leicester office for the company. Twelve more Brewin staff followed them over the next month. Late last year Brewin issued a writ claiming breach of contract and compensation for damages.
Wealth Manager can reveal the defence of the Leicester six raises a number of key issues for national wealth management firms. It highlights the resistance firms can face to centrally imposed charging structures and diktats over what size of client is viable.
The six said the group’s blanket changes to the charging structure and internal accounting practices had ‘an immediate adverse impact’ on their remuneration, while they were also instructed to jettison long-standing smaller clients, regardless of their relationship with them.
‘They were increasingly concerned that there had been a material shift in the culture of the claimant’s business, from an entrepreneurial and client-focused approach to one of rigidity and prescription with an undue emphasis on shareholder return,’ the defence said.
The document also raises questions over the enforceability of contracts signed by wealth managers. In particular, clauses preventing colleagues from discussing any approaches they have had from rival firms or requiring them to inform the main board whenever an approach has been made.
The six stressed the closeness of the team, several of whom had worked together at multiple companies for periods of up to 25 years, meaning they would inevitably discuss being approached.
They also denied the allegation that they resigned on the same day in a bid to damage Brewin’s Leicester business. Three of the six claim they were in fact asked by Brewin to quit on the same day when it originally poached them as a team from Quilter in 2005.
‘The employee defendants were free to resign their employment with the claimant and to accept employment with a competitor. The departure of the employee defendants was an inevitability by the date of their resignations in March 2013 given their dissatisfaction with the claimant,’ the defence said.
Charles Stanley and the Leicester six also rejected calls for compensation, saying that given some clients had been with the individuals for 15-30 years and included family and friends, ‘such clients would inevitably follow them to a new firm.’
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