An adviser is considering taking legal action against Openwork for breach of contract after he and another adviser were dismissed from the network for promoting Ucis funds.
Tied adviser Ian Milne invested client money in the Olive Tree Kalamon fund between 2008 and 2011. Last December, the FSA informed Openwork that the two advisers were promoting the Ucis fund without the required authority.
Milne had four Openwork clients invested in the Ucis fund with a total investment of around £160,000. Another adviser, Philip Orr, had one Openwork client with an investment of around £16,000.
In February, Openwork suspended them for breaching the Financial Services and Markets Act and the advisers were deemed to be not fit and proper to represent Openwork.
The advisers claim Openwork knew they were investing in the products for three years and say it was the network’s responsibility to tell them of any wrongdoing.
But Openwork says it told the advisers that any clients wanting to invest in the Ucis could only do so within a Sipp.
Olive Tree told the advisers the funds were to be used on an execution-only basis and not through Openwork.
Milne says: “I just cannot believe how poorly we have been treated by the network. I accept that I did something wrong but it was through ignorance and we have been treated dreadfully.”
An Openwork spokesman says: “Until December 2010, Openwork was not aware that the advisers were promoting a Ucis. Openwork has never marketed a Ucis proposition nor have we ever given implied or explicit approval for a person holding a contract with Openwork to promote or in any way give advice on a Ucis.
“We are satisfied with the grounds for termination and we are yet to receive any formal notice of legal proceedings.”
The FSA declined to comment.