A financial adviser has been fined £10,000 by a court after he collected details of clients of the firm he was leaving in order to approach them again when he started his new firm.

Stephen Wales left Torquay-based advisory firm the Pension Drawdown Company intending to set up his own firm, Ripley Wales Financial Planning. But before he left, he downloaded six gigabytes of client data using a flash drive, and was later found to have the entire client database of the Pension Drawdown Company on his computer when the police were asked to investigate.

Ripley Wales Financial Planning is a trading style of Positive Solutions (Financial Services) Limited.

Clients often see themselves as dealing with an individual adviser, rather than the firm as a whole. Advisers may also colloquially speak of the individuals they service as ‘my clients’.
However, the Data Protection Act is clear on this issue. The clients legally belong to the firm, not the individual adviser, and they remain the firm’s clients when the adviser leaves. The only way an adviser can retain the clients’ personal data after leaving the firm is if the firm formally gives its consent to this. Mr Wales’ defence was that there was a gentleman’s agreement in place between himself and the firm which allowed him to retain clients he had brought to the firm, and that he was intending to delete the remaining clients’ data at a later date.

In a hearing at Exeter Crown Court, Mr Wales admitted two breaches of section 55 of the Data Protection Act, and was ordered by Judge Graham Cottle to pay £10,000 in compensation to the Pension Drawdown Company director Jonathan Walker.

The court acquitted Mr Wales on fraud charges.

Judge Cottle said:

“The jury at your trial for fraud was unable to reach a verdict because some of the jury probably believed this was really a civil dispute rather than a criminal matter. I utterly sympathise with that view.

“You have now admitted knowingly obtaining personal data. A long time has passed and you have set up your own business and a line needs to be drawn under this case.

“You were responsible for your previous employer losing some commission so I shall order he receives compensation.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.