2plan, the national IFA, will stand trial at the High Court in Leeds on Monday accused of "fraudulent misrepresentation" by an IFA seeking £500,000 in damages from the company.
Peter Trotman, former managing director of Source Financial, claims 2plan offered him financial inducements and a seat on the national's board in exchange for bringing over around 30 advisers 2plan cherry-picked from his firm, but it then reneged on the deal.
However, 2plan is bringing its own case against Trotman for about £100,000 it claims the company lost as a result of what it alleges was his failure to comply with his contractual obligations when 2plan bought his firm in 2009. It says Trotman's case is nothing more than a "spurious counter claim".
But Trotman's solicitor says he has email, text message and verifications of verbal promises on the agreement made by 2plan CEO Chris Smallwood which he can produce in court.
David Turner, partner at law firm Foot Anstey who is acting on behalf of Trotman, will allege 2plan used these promises in presentations to Source IFAs to encourage them to join the national.
"2plan said to advisers ‘don't worry, Pete's getting a place on the board, come over'. Wary IFAs were obviously very reassured by this and signed up," he claims.
Turner says Trotman claims he agreed with 2plan to bring over about 30 advisers on a fee per adviser basis, in addition to his place on the board, but that once the Source IFAs joined the national 2plan backtracked on the deal.
Turner says the case is a warning to smaller firms.
"Small and medium sized firms are offered the world by large groups looking to take them over, but they can just as easily have it all taken away," he says.
The deal was announced in March 2009, with both firms publicly announcing all Source's 43 advisers would become registered individuals (RIs) of 2Plan.
Trotman claims he was given a "sweetner" of a few thousand pounds to do this, with the expectation of more to come after the signings.
But he says once the chosen advisers were signed to 2plan he was dropped from the deal, and told he would not be offered a place on the 2plan board or any of the further payments he says had been agreed.
2plan chief executive Chris Smallwood says: "The allegation of fraudulent misrepresentation has been raised by Mr Trotman in an attempt to avoid liability for the sums due to 2plan.
"2plan is claiming almost £100,000 due to the company as a result of Mr Trotman's failure to comply with his contractual obligations following an agreement between him and 2plan whereby the company purchased the assets of Source Financial Limited.
"Both 2plan and our solicitors, Keeble Hawson LLP, are confident that there is absolutely no merit in this spurious counterclaim and that 2plan will be vindicated at trial."
The trial is expected to last three days.
2plan was taken over by Openwork in September 2010.
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