An IFA is suing Zurich Advice Network, alleging the firm told him he had to switch his business from a hybrid IFA/ZAN franchise to become wholly multi-tied through Openwork, Zan’s successor.
Evesham IFA De Montfort Chase says a claim is being filed against ZAN for £500,000, alleging loss of earnings and damages for breach of contract.
Former principal Mark Robinson says he agreed to franchise half of his business to ZAN as a tied agent, having been promised earnings up to £10m within a few years if successful.
But he says when ZAN became Openwork in mid-2005, it insisted he could no longer run a hybrid model.
Robinson says he resisted these new terms, agreeing to move to Openwork only if he could retain his original terms and move half the business but he claims that ZAN terminated his contract.
But Zurich says the contract was suspended in March 2005 and terminated in May following an internal investigation when it was found DMCL’s customers were confused about the firm’s regulatory status.
Robinson says it was understood by ZAN that his premises would be shared between the various businesses – an IFA, a consultant and the franchised tied agent, but the firm terminated his contract.
He says: “They arrived with a report for their Terminations Advisory Group with a document stamped “secret”, saying my hybrid practice would confuse customers.”
Zurich spokeswoman Nicola Bryson says: “Zan had a number of advisers who operated a tied practice in conjunction with an IFA. However, Zan was required to ensure that customers were clear as to who they were dealing with and in what capacity.
“The De Montfort Chase franchise contract was suspended in March 2005 and was terminated in May 2005 following an internal investigation.
“A three-month notice period for termination was not appropriate for matters concerning regulatory breaches. Those issues were entirely distinct to any matters involving Openwork.”