Quilter sued former employee, Emma Falconer, and her current employer Continuum for alleged breaches of contract and confidentiality.
The adviser joined Quilter from Tilney Financial Planning in January 2019 but left after six months while still within her probation period. She had been employers by Quilter to take over a book of clients that the firm acquired through an acquisition where the acquired adviser was retiring.
She started work for Continuum in July 2019.
However, the high court found that Ms Falconer was in breach of her “duty of fidelity as well as a breach of the duty of trust and confidence owed to Quilter” when she also scanned client documents onto her personal laptop, including a Quilter client service agreement, valuation reports and fact finds.
The judge noted that there was no evidence to suggest Continuum knew of this or encouraged her to do this.
As part of its legal case against Ms Falconer, Quilter looked to enforce its non-competition clause, non-solicitation clause and non-dealing clause. Ms Falconer argued that these covenants were wider than reasonably necessary and were therefore invalid.
The judge ruled that the restrictive covenants in her contract were “not industry standard” and that “Quilter has failed to show each of these covenants to be no wider than is reasonably necessary for the protection of its legitimate business interests and I find that each of these covenants is an unlawful restraint of trade and void.”
Quilter also alleged that Ms Falconer solicited 23 clients in breach of her nine-month and twelve-month restrictive covenants. However, the judge said there was not sufficient evidence that she solicited clients.
A spokesperson at Quilter stressed to Financial Planning Today that it won part of their case against Ms Falconer and that the judge ruled that in this particular case the restrictive covenants were unenforceable rather than being unenforceable as a general rule.
The spokesperson said: “At Quilter 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.”