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Court allows FCA to submit evidence in Sipp claims case

High-Court-Building-700.jpgA High Court judge says the FCA can submit evidence in a case that could shape how Sipp misselling claims are handled in the future.

In the case, which started today, lorry driver Russell Adams alleges Carey Pensions missold him a self-invested personal pension.

Carey Pensions is accused of using unregulated introducers to invest Adams’s Sipp money into Store First unit pods.

Legal representatives of Adams said the FCA should be allowed to submit evidence to the case as it raises questions of how Sipp providers comply with conduct of business rules and the regulated activities order.

However legal representatives of the defendant, Carey Pensions, said the FCA should not be allowed to submit evidence to the case.

This is because “the FCA has an agenda” in the trial and it “cannot be in the interests of justice” for Carey Pensions to be singled out by the regulator, the lawyers said.

Responding to the arguments Judge Marc Dight said: “The question before me is whether the FCA’s involvement would promote the interest of justice. Given the questions raised I am inclined to let the FCA to intervene in a limited basis.”

The case is significant as other cases with similar issues have emerged.

For instance, the High Court has approved a group litigation order relating to claims against Berkeley Burke Sipp Administration in February.

There, it is alleged Berkeley Burke established the Sipps in breach of the Financial Service and Markets Act 2000, after unregulated third-party firms advised them to transfer their traditional private or occupational pension funds to a Berkeley Burke Sipp in order to invest into a variety of high risk schemes.

Money Marketing understands the FCA has taken an interest in these cases as they raise questions about what responsibility Sipp providers have to investors when underlying investments go badly.



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. All eyes on the High Court albeit the FSMA 2000 is very clear. Section 25 covers the boundary between introducing and arranging. Many of these unregulated introducers were ALLOWED to ‘Bring About’ or ‘Make Arrangements’ a particular investment. Section 27 details the enforceability and the consequences.

    The lure of easy money has a very strong appeal….. so much so these regulations were ignored

  2. This is long overdue. If FCA wins this case it will open the floodgates. The questions is “how Sipp providers comply with conduct of business rules and the regulated activities order”. The answer is “They dont” There are pensions that have been transferred into investments like storepods and the individual has lost most of his pension value as these investments are illiquide and for high networth investors. Berkeley Burke in my eyes has a responciblility to the invester but they fail to do “due diligence ” on the individual. They should be held responcible for the loss as these types of investments are unsuitable for the ordinary investor. Im on the side of the FCA on this one.

    • Its not the FCA fighting the case, its the client. The FCA are there to provide clarification on the regulation and responsibilities at the time. These will start with the FSA Thermatic Review 2009 and the Financial Services Marketing Act 2000. In many of these cases unregulated introducers were openly allowed by the Sipp providers to venture into regulated territory such as arranging and bringing about specific investments. The lure of easy money had a very strong appeal….. in one case the investors lost circa £ 3.5m whilst the Sipp provider trousered circa £ 350k and more repugnant continues to draw circa £ 40k in fees annually.

      Sipp providers have been ducking and diving for years being very tight lipped about what they did or know, hopefully if the regulation and laws are applied correctly this will mark a day of reckoning for these providers.

  3. The SIPP is not to blame here… its the crappy investments used in it

    Surely to god (which ever you kneel before)we need to start regulating the products and investments themselves, we can clearly see regulation of individuals is futile, as the bad and down right unscrupulous among us just run around unchecked till they are caught, causing untold damage.
    You will never stop a criminal mind or indeed the down right greedy, and in this case you cant sell crap if there is no crap to sell, and if there are no unregulated products out there, then there should have heavy levies attached to the ones that pose the most risk to any investor.

    Any investment that has anything to do with land, money, shares, property needs to be regulated. And the marketing of interest rates banned, I must get 15 emails a day from people marketing there investment at 8% to as high as 14% no wonder clients are are chasing these and advisers (or not) are transacting in to them.

    And of course the FCA should be able to submit evidence.

  4. If the starting point for a complaint of this type is that, for most people, a SIPP is neither suitable or necessary, let alone flaky, highly speculative investments within one, and certainly not for a very probably unsophisticated investor such as a lorry driver, the involvement of the FCA doesn’t seem unreasonable.

    Put behind the wheel of an HGV, I would almost certainly be a danger both to myself and to other road users.

    Except for those with special permissions to advise on them, adviser firms should be banned from steering clients anywhere near UCIS.

  5. The decision can only go one way. This will be a death sentence to some Sipp Providers who have basically been involved in a crime against honest people. Its their own doing. GREED

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