Chairman urges brokers to review contracts of employment
The Insurance Brokers Standards Council (IBSC) has released guidance for brokers that provides best practice advice when dealing with restrictive covenants.
Restrictive covenants are designed to protect a company’s interests when brokers move from one firm to another, and typically cover issues such as confidential information and client relationships.
IBSC chairman Paul Anscombe said the covenants caused “grave concern to employers and individuals alike” and that he supported a “complete suite of post-termination restrictions”.
“This is something that the broking community has to deal with every week, every month in the market and, until now, there’s been no real reference point for brokers to turn to and see what’s reasonable and what’s unreasonable,” Anscombe told Insurance Times.
“That means we all end up spending a lot of money on legal fees and get very distracted from our business.”
Anscombe urged brokers to review their contracts of employment and remind employees what their responsibilities are when joining or leaving the firm.
“All too often an employer will say ‘well I’ve got my contractual restraints and the employee can’t do anything’. But in the real world clients want to deal with individuals and that sparks a potential dispute,” he said.
This is the fourth piece of guidance released by the IBSC, which was set up in April to provide best practice information for individual brokers.
The council is working on 30 other consultations to develop guidance for members. Next month it will release guidance on how brokers should handle SME clients profitably and compliantly off the back of the FCA’s thematic review into the area.