Quilter Private Client Advisers has won elements of its high court case against an ex-financial adviser.
The firm sued Emma Falconer and her current employer, Continuum, for alleged breaches of contract and confidentiality.
Falconer was an adviser at Tilney Financial Planning and, at the end of her maternity leave in December 2018, she resigned from the firm.
In January 2019, she was hired by Quilter but left after only six months when she was still within her probation period.
She was given two weeks gardening leave, which ended on 19 July 2019.
On 24 July 2019, Falconer started working at Plymouth-based advisory firm Continuum.
Breach of duties
The high court found that Falconer had been in contact with her new employer prior to resigning and before the end two-week notice period.
Between 24 to 26 June 2019, Falconer took a competency assessment with Continuum, which judge Calver deemed a competitor of Quilter, with the aim to join the firm.
She had phone calls with Continuum employees to prepare and agree “terms of engagement” to start working there.
During her gardening leave, Falconer contacted at least three Quilter clients without the firm’s permission.
While she was working at the firm, Falconer also scanned client documents onto her personal laptop.
Judge Calver said: “The use of this confidential information for her own purposes was also a breach of the [duty of fidelity and duty of trust and confidence]; as was the fact that by doing this she was making preparations to divert business opportunities away from Quilter and to compete with Quilter; as was her concealment of her own wrongdoing by scanning these documents onto her personal laptop without informing Quilter that that was what she had done during her employment with it.”
Invalid clauses
But Quilter did not prevail on all counts, specifically with regard to “restrictive covenants” in Falconer’s contract which sought to prevent her working for a competitor for nine months.
The covenants also restricted her ability to contact Quilter clients for 12 months after leaving the firm.
The high court ruled that such a clause is not standard in the sector and that it is “an invalid restraint of trade and unenforceable as a result”.
Consequentially, the claims under non-competition, non-solicitation and non-dealing covenant clauses were dismissed, as was the case against Continuum.
Quilter’s financial claim was of £39,000; but, as the case went to trial, the costs for the firm alone soared to £500,000 ($670,000, €554,000), which it sought to make Falconer pay.
But the judge noted that the financial adviser was forced to represent herself due to a “lack of funds”.
“In view of these facts, it is highly regrettable, and to nobody’s credit, that the parties failed to settle this case at a mediation in January 2020 and instead chose to occupy the court’s time fighting a full-blown trial.”
‘Necessary action’
A Quilter spokesperson said: “We take our duty to protect clients very seriously and it became clear in our investigations that their data were not being treated appropriately and have proceeded to take necessary action to highlight the conduct we expect of our advisers and how they treat our clients.”
International Adviser reached out to Continuum but did not receive a comment in time for publication.
IA was unable to contact Falconer for comment.
