Brits consider recruitment code like U.S. version

The British financial services industry is considering development of a recruitment protocol similar to the pact used in the U.S.
Members of Britain’s Tax Incentivised Savings Association (TISA) met Sept. 20 to begin work on a British version of the protocol, which allows brokers and advisers to take client contact information when they leave one signatory firm to go to another.
TISA represents about 120 firms in the financial services industry.
Some 15 to 20 member firms are reviewing the U.S. version to see how parts of it might work in the U.K. market, according to officials at Raymond James Financial Inc., which has been pushing for adoption of a U.K.-specific pact.
In the U.S., about 850 brokerage and advisory firms have signed on to the protocol.
The pact is credited with reducing litigation arising from adviser recruiting.
The push for a U.K. protocol comes after London-based Raymond James Investment Services Ltd. won a court battle earlier this year in a raiding case with Towry Holdings Ltd. Towry, which took over the U.K. business of Edward Jones in 2009, accused seven former Jones brokers of illegally taking clients to Raymond James.
But in February, a U.K. court found no evidence of solicitation and rejected Towry’s $9.4 million claim. Instead, it awarded Raymond James $1.9 million in damages.
The U.K. “has extensive restrictive covenants,” usually with six- to 12-month terms, said David Hazelton, head of recruiting for Raymond James in the U.K. And unlike in the U.S., some firms also have “non-dealing” agreements that prohibit an adviser from even accepting unsolicited customer transfers.
More employment disputes are expected as the independent segment of the U.K. market consolidates and a major reform of the British financial services industry goes into effect next year. The reforms will put restrictions on receipt of trail fees and require professional certification for many advisers, many of whom will have to align themselves with new providers who offer more investment choices and better pricing.
TISA members plan to meet again in about two months to review their findings.