View the article online at http://citywire.co.uk/wealth-manager/article/a744182
Why we quit Brewin for Charles Stanley: Leicester Six reveal warts and all
by James Phillipps on Apr 03, 2014 at 14:52
Each of the defendants considered the changes ‘shortsighted and damaging, both to clients and to their own individual businesses’ and a ‘regrettable and risky change in business strategy’.
The six said Brewin introduced a minimum fee for clients of £1,000 a year plus VAT, and instructed that ‘clients who were considered insufficiently profitable should be terminated.’
They said this made many younger clients ‘unviable’, despite their longer-term earning or inheritance prospects, and damaged existing relationships.
They bemoaned the lack of flexibility around the charges and said as a result ‘fee increases were on average in the region of 50%’ for its clients.
Furthermore the fee hike was communicated to clients through a centralised mailing, which the six considered ‘badly written and heavy-handed’.
Added to this, a change to the group’s branch cost and funding structure hit the Leicester office hard, they claim, due its substantial IFA and dealing business. The defence said Brewin did make ‘transitional payments’ to the Leicester office in 2011/2012, but claimed that the changes were still to its ‘long-term detriment’.
‘Footing the bill for the FSCS levy’
Around the same time, the defence said Brewin implemented new changes to the office’s bonus pool, which was shared between all of the six barring Sawyer.
The six believed that most wealth management companies paid the Financial Services Compensation Scheme levy centrally and were aggrieved to be charged 10% of its bonus pool to cover the costs.
Their perception was that Brewin ‘expected its more profitable offices –including the Leicester office- thereby unfairly to subsidise less successful and profitable offices.’ The result being it hit all of the defendants' remuneration.
‘The IFA conflict of interest’
The six said the fallout from Project Amethyst, particularly the fee hike, undermined their IFA intermediary relationships and their concerns mounted through 2012 into the first quarter of 2013.
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