Saturn Portfolio Group is taking a former Van Eyk adviser to court. Saturn took over Van Eyk Advice late last year.

Saturn chairman Craig Stobo said, in the course of moving clients over to Saturn, it had become apparent that clear enforcement of contractual property rights was needed in relation to ownership of client revenues.

Last year, Spicers’ restraint of trade clause in its contracts with advisers was called draconian by a High Court judge, after an adviser who moved to Forsyth Barr was taken to court when five of his former clients asked to follow him to his new role.

Stobo said it was an issue for the industry.

“Discussion with industry leaders highlighted that this issue has not been confined to the experience of Saturn Portfolio. That is unacceptable.”

He said the industry needed to shed “patched cottage practices born of the last century and move to the professional self-regulated business disciplines of the future. If we don't embrace professional standards amongst ourselves voluntarily we don't deserve a sustainable reputation from clients for excellence and we deserve regulation imposed from on high."

Institute of Financial Advisers chief executive Michael Dowling said advisers did not always understand the agreements they were operating under.

“I’m part of an agency agreement and it’s quite clear but I’ve been surprised at the number of my colleagues who don’t understand how the agreement works.”

He said better understanding was part of the evolution of the financial advice sector.  “Advisers are starting to understand what the agreements are and how they can deliver to consumers’ needs within those agreements.”

He said in some cases advisers who stepped over the line were doing so in an attempt to serve their clients as best they could.

"It’s partly why the legislation is written as ‘putting clients’ interests first’ not ‘best interests’ because sometimes the best is not possible because of commercial arrangements.”

Dowling said he hoped legislative change would make it easier for clients and financial advisers to understand how the line of service worked when a business was bought. 

He said many of the agreements put in place predated the Financial Advisers Act and Financial Markets Conduct Act.