Signing contract form

An Ontario court has ruled that a financial firm can impose performance conditions on its advisors through their contracts with the firm.

The Superior Court of Justice dismissed an application from an advisor, Jing Zhang, who brought an action against his firm, Shenglin Financial Group Inc. (SFG), seeking payment of his service commissions on London Life insurance policies that were reportedly withheld by the firm.

According to the decision, in 2017 the firm decided to make the payment of service commissions, which are ostensibly paid to advisors for servicing existing clients, conditional on advisors’ new sales performance.

The decision indicates that Zhang argued that the conditions introduced by the firm shouldn’t disrupt the payment of his commissions.

“He argues that he is entitled to such payments since the [advisor] contract does not permit SFG to withhold it based on its new policy of minimum standards,” it said.

The firm argued that the commissions are “a discretionary payment not subject to legal enforcement.”

Ultimately, the court ruled that service commissions are covered by the standard advisor contract between the firm and its advisors, and that the contract allows the firm to impose performance standards on its advisors.

“Based upon the contract, SFG was entitled to put into place the performance standards that are in dispute, even when the financial advisors were not in agreement with it,” the court said.

As a result, it dismissed the advisor’s suit seeking payment of those commissions.