A STOCKBROKER and financial adviser from Whalley is celebrating her part in a “David and Goliath” legal victory with national repercussions.
Imagine returning home after the birth of your first child and being served with an injunction by a major league company suing for millions of pounds.
That is just what happened to Tracey Simpson, sparking a battle for her and six other who stood up for what they believed was right. Now they have been vindicated by a Judge at the Royal Courts of Justice in London, who has ruled that while a company can buy the names and addresses of another company’s clients, it cannot buy the clients’ loyalty.
As with all such cases, the details are long and complicated, but here is an outline of how it came about:
Tracey was previously employed by a company called Edward Jones, a large financial adviser firm that trained individuals as stockbrokers and financial advisers. As such, she worked hard to build up her network of local clients, maintaining regular and often face-to-face contact and building strong personal relationships in the community.
That networking included joining Whalley Chamber of Trade, serving as its secretary and organising the annual dinner dance. Personal contact and just being there to give help and advice was appreciated by clients during the stock market crash of 2007/8.
Then in October 2009 came an announcement Edward Jones was being taken over by Towry Law, another large financial adviser firm that had acquired several companies. It meant changes to Tracey’s working practices that she was unhappy about: she would not be based locally, would have to charge a fee every time she saw a client, and would no longer operate as a stockbroker. So she and another local Edward Jones adviser, Wayne Hayhurst, decided to set up their own limited company, based in Longridge.
Part of their previous contract meant that for 12 months after leaving, they could not actively seek, or “solicit”, business from their previous clients, but, as Tracey explained: “We both felt we had built a business from scratch before and could do so again.”
Tracey and Wayne’s new limited company used the services of Raymond James Investment Services Ltd – a move which enabled them to work as they had previously, in the heart of the community and with local people, serving individual investment needs.
So, not surprisingly, many of their clients, having enjoyed a great personal service, were loathe to let it go and actively sought them out, wanting them to continue handling their business.
“We were both astounded by the number of clients who contacted us and wanted to work with us,” said Tracey.
“Many of them had come to be friends – we would see them in the gym, fish and chip shop or the pub.
“As a result of the people we had advised contacting us, we had several ex-clients moving their money from Towry Law to our new business and wanting to work with us.”
It was the same story in other places where financial advisers had taken a similar route to Tracey and Wayne. So much so that £33m. was transferred to Raymond James Investment Services Ltd by only seven advisers.
Towry decided on legal action and took the seven – including Tracey and Wayne – plus Raymond James Investment Services Ltd to court, alleging they had solicited their former clients.
“I personally was served my injunction and proceedings the day I got home after giving birth to my first child in August, 2010,” said Tracey.
“Towry pursued damages of £6m. As you can imagine this was a very upsetting and worrying time for us all. None of us had breached our contract and we had all acted with integrity. We were being penalised for giving good advice and having good strong relationships with our clients.
“Effectively this action was undermining the clients’ freedom of choice and ability to decide who they wanted to look after their hard-earned money, savings and investments – something that is very personal to people.”
Thankfully, the judge at the Royal Courts of Justice saw it the same way, finally ruling on February 14th – Valentine’s Day – in favour of the seven financial advisers and the firm of Raymond James.
The proceedings had lasted two years and involved 40 witnesses, but the gist of the 150-page judgement was that while a firm can buy lists of client’s details, it cannot buy their loyalty or continued business. The clients remain free to take their business where they like.
“We had a lot of support from our clients and some were called to court to testify for us,” said Tracey.
“Obviously this was very daunting for them as they had to come to London and appear at High Court.
“It has been a victory not just for us, but for many small local companies that work in their communities and do a good job for people.
“In the Ribble Valley I believe we all try to support the local businesses and small companies, we work well together and go the extra mile for our clients and customers. It shows if you do a good job for people and have good relationships with your clients, you will be successful and it doesn’t matter what ‘big fancy brands’ come along.
“It’s also a victory for clients who want to have the freedom of choice to decide who they have looking after their money. If people want to work with people in the community that they know, trust and value, then they shouldn’t be told they can’t by a giant of a company that tries to buy their business.”
l Tracey and Wayne’s business, Raymond James Investment Services Ltd, is based at 28 Berry Lane, Longridge. For more information, phone 01772 780300, e-mail: firstname.lastname@example.org or visit: www.RJIS.co.uk