About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Friday, November 15th, 6:56PM
rss
Latest Headlines

Advice firms give up on pursuing restraint of trade cases through court

Advice firms that acquire other businesses are being caught out by restraint of trade clauses that turn out to be unenforceable.

Wednesday, April 5th 2017, 6:00AM

by Susan Edmunds

The issue has played out in court a number of times over recent years. At the end of 2015, Saturn Portfolio Group revealed it had struck trouble with two advisers when it took over the Van Eyk Advice business.

Saturn chairman Craig Stobo said, in the course of moving clients over to Saturn, it had become apparent that clear enforcement of contractual property rights was needed in relation to ownership of client revenues.

A source said while Saturn had reached an agreement with one adviser, it had been forced to give up its court bid against the other because of the cost and effort involved.

Shane Edmond, executive director of Forsyth Barr,  said it was something that was often a problem. His firm has previously picked up advisers who have left businesses that were sold.

Some advisers might not like the terms of the deal, or the way it had been handled, and would decide not to go with the business., he said.

“They've received no consideration out of the sale and those people need to earn a living.”

He said in those cases, advisers end up taking their clients with them.

“Ultimately if clients choose to follow an adviser somewhere else – you don’t have a restraint over the client.  It’s very difficult, near impossible - the client can’t be stopped from changing.”

Most buyers of entities would have factored into their purchase calculations that a certain percentage of clients would be lost, he said. “Van Eyk is the classic one but there have been lots of others.  In these sorts of organisations where there have been some speeding tickets as well, some bad publicity, some clients were already unsettled.”

In 2014, Spicers’ restraint of trade clause was called “draconian” in court. The judge said the perpetual no soliciting clause relating to all Spicers' clients was not enforceable.

Tim Williams, of Chapman Tripp, said advisers would need to get advice on how enforceable a particular restraint of trade was.

“When you are buying a company the restraints of trade should be enforceable by the courts. But in practice it might be an issue. You can get well drafted ones that are fully enforceable but the ones that are vague the courts might be more reluctant to enforce.”

Tags: financial advisers

« Unlocking the gold in your client base…LVR restrictions to be reviewed »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 15 November 2019 4:16pm

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com