Setting up new business while employed?

Situation:

A friend, whilst employed, created a competing company in 2009 and remained working for his employer until Feb 2012.

I have helped him with this project since July 2010 (off the record): delivering flyers, cold calling, etc; trying to attract interest in the new business. At no point did i interact with any party connected with his ex-employer.

After leaving his employer, adverts were placed in the local papers for two weeks and a number of his employers customers are beginning to come over to the new business. They are making complains about his ex-employers service since he left and are saying they generally feel he can protect their interests better.

He did not sign a contract with his ex-employer, so no restrictive covenants are in place.

His ex-employer has issued a letter asking him to stop taking their customers, also they accuse him of stealing their data and trading whilst employed.

From what research I've done:

1. I don't think his ex-employer can ask him to turn down business on the basis that he would be taking their customers. Fair trading states the customers are entitled to source a service from where ever they choose.

2. Stealing data only applies to trade secrets and customer contact details do not apply. My friend had a relationship with all the parties that have come across, some from before he worked for his now ex-employer and they all post their businesses online. The data is readily available to anyone.

3. Trading whilst employed by his ex-employer. I'm not certain what the implications of this are; whether they have any legal stand point against the new business using this argument.

Any advice on the legal ramifications of this situation would be greatly appreciated. If you could correct any misapprehension I may be under or expand on any of it, it'd be great.

Thanks very much...