Sipp provider faces fresh claim over unsuitable investment

Old-Bailey-Justice-Court-Fine-Ban-700x450.jpgA law firm has launched a new legal challenge against embattled Sipp provider Carey Pensions over allegations it failed to undertake the required due diligence when accepting Sipp investments.

Anthony Philip James & Co is bringing the case on behalf of Mr R, who lost £30,000 after investing into Green Oil Australia through the Carey Pensions Sipp.

The new litigation comes as earlier today it was announced Carey Pensions is being sold to pensions provider STM Group and is currently waiting for another crucial court ruling over separate allegations it missold a Sipp to a client.

Carey Pensions claimed it did not break conduct of business rules when it set up a Sipp for a client during a High Court hearing in March.

In that case, lorry driver Russell Adams alleges Carey Pensions missold him a Sipp in February 2012, when he was paid an inducement of £4,000 into his savings account to encourage him to put money into rental scheme Store First.

The case is seen as a pivotal ruling on whether Sipp providers should take responsibility for unsuitable investments.

In the latest case, APJ says inexperienced investor Mr R made the choice to invest based on advice from an unregulated introducer who cold called him.

He invested into Green Oil Australia, an unregulated collective investment scheme that has now failed.

In 2015, Mr R brought his case to The Pensions Ombudsman who found he was poorly advised by the unregulated introducer and that it was questionable whether a Sipp was the appropriate pension vehicle for a fund of £30,000 or if Green Oil Australia was a suitable investment in his circumstances.

The Ombudsman found the FCA guidance that Sipp providers monitor and bear responsibility for the quality and type of business introduced to them did not apply in Mr R’s case.

APJ say this directly conflicts with the FCA’s submission to the court in an ongoing judicial review over another case of Sipp provider responsibility, Berkeley Burke, arguing the court should find Mr R is owed compensation by Carey Pensions for his losses.

APJ solicitor Glyn Taylor says: “In their written submission in the Berkeley Burke judicial review, the FCA specifically states that at all material times, the Financial Services Authority’s thematic review report in 2009 highlighted that the failure to undertake due diligence is a breach of the regulatory rules to act honestly, fairly and professionally.

“We expect the court to uphold the decision made against Berkeley Burke, therefore we are confident that a court will also find Mr R was failed by Carey Pensions.”

Carey Pensions says no formal court proceeds have brought to it yet so it has no knowledge of the case and cannot comment.

Other embattled Sipp providers that are also facing challenges for their role in cases involving unregulated investments include Liberty Sipp.

In September the Financial Ombudsman Service ordered Sipp administrator Guinness Mahon Trust Corporation to pay out compensation over non-standard investments.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. If SIPP providers have any sense they will close the door to unregulated schemes, and the FCA will have to make it clear what is acceptable.I suspect this is already the case for most, but too late in the day for some.

    If we cannot stop these crooked advisers then we all pay, ordinary unsophisticated investors are being lured with the promise of great returns and immediate cash in hand, knowing that they are in a win-win situation as there is always someone else to blame if it goes wrong, and plenty of law firms ready to take up their cause.

    • I imagine that one problem facing the POS and the FOS is that unregulated introducers are beyond their reach and probably have neither PII cover or sufficient resources to meet any judgements against them, hence they go after the regulated SIPP provider. But, even then, I doubt if any SIPP provider has PII cover in respect of unregulated investments accepted on the advice of any unregulated party. It’s a right royal mess.

  2. One paragraph of this article states that the [Pensions] Ombudsman found the FCA guidance that Sipp providers [are obliged to] monitor and bear responsibility for the quality and type of business introduced to them did not apply in Mr R’s case. Yet, further down, another states that the Financial Ombudsman Service ordered Sipp administrator Guinness Mahon Trust Corporation to pay out compensation over non-standard investments. Is this not a direct conflict between the stances taken by these two Ombudsman services? Which of them is responsible for handling complaints of this type? And, if complainants (or their legal representatives) can go to court to get Ombudsman’s rulings overturned (they hope), does it not make something of a mockery of the ombudsman service? What if APJ’s court action is unsuccessful? Will they then go to the Court of Appeal? And how binding on SIPP providers is FSA guidance, as opposed to a hard and fast rule? That, in itself, could be argued ad infinitum. Why, on an issue with such potential for serious consumer harm, did the FSA issue only guidance? On its own website, the FCA claims to “secure an appropriate degree of protection for consumers”. Really?

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