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FOS reviews Sipp complaint upheld against Berkeley Burke

The Financial Ombudsman Service is reviewing a complaint previously upheld against Sipp operator Berkeley Burke Sipp Administration.

In July, Money Marketing reported the FOS had upheld a complaint against Berkeley Burke for failing to carry out adequate due diligence on a £29,394 unregulated collective investment scheme.

The complainant transferred the money from a personal pension plan into a Sipp in 2011 after being introduced by an unregulated agent. He invested £24,195 in Sustainable AgroEnergy, an unregulated investment. The firm went into administration and the investor lost his entire fund.

Ombudsman Roy Milne ruled that Berkeley Burke should have been alert to the fact the investment was potentially unsuitable and should have made further enquiries.

But the FOS says it will now consider the complaint again after Berkeley Burke started judicial review proceedings.

An FOS spokesman says: “The ombudsman issued a decision in June. Following the decision, the business commenced the judicial review process.

“The outcome of that process was that the ombudsman will now consider the complaint afresh.”

The decision has been removed from the FOS website.

Berkeley Burke recently held a meeting with a number of Sipp providers to discuss the FOS decision.

Association of Member-Directed Pension Schemes chairman Neil MacGillivray, who attended the meeting, says: “This was a very harsh decision. As an industry we fully accept we have to do due diligence but the question is how much. We need more clarity from the FCA on this.”

Berkeley Burke declined to comment. 


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. It is interesting to note that the threat of a Judicial Review from a firm with clear intent, deep pockets and political connections has moved the FOS to reconsider the matter.

    APFA would do well to recognise the potential in this with regard to the longstop issue.

    As I understand it, the FOS can only re-open a final decision if both parties agree to it. It would be fascinating to know why the complainant has agreed to this.

  2. But but but a judicial review will only review the procedures adopted by the FOS and not the case nor the outcome….

    That said, it would be great if this one finds that the FOS has abused its statutory powers and thus its jurisdiction by undertaking ‘procedures’ in this regard not so authorised and thus arriving at a decision outside of those powers!

    Otherwise, meantime (and continuing) the FOS is accountable to no-one at all – not The Treasury, not the FCA, not Government nor the Courts. I don’t really believe that everyone has appreciated that yet.

    Regardless, this remains one of those cases which, on the face of it, is clearly unjust in that the complainant clearly wanted specifically to put his whole fund into one highly speculative investment and the provider was purely the conduit for that. Unless Berkeley Burke was in some way complicit in the underlying investment or the unregulated agent, I cannot see how it should be responsible for the idiot Mr A’s investment choice. I suspect we shall find out that Mr A was also the MD of AgroEnergy….. nothing would surprise me about FOS decisions these days.

  3. I am interested to know what positive gains could have been identified in the justification of the transfer of such a small pension fund to a SIPP.

    Was a Fact Find completed ?
    Was an ATR completed?
    Was the capacity for loss established?
    Was a Suitability letter completed?

    Fairly routine stuff; but did the company check the submission of a case from the unregulated adviser?

  4. This story is based on a misunderstanding. Every time, a firm applies for judicial review against an Ombudsman scheme, it becomes a litigation matter and it would be improper to regard a decision as in some senses final while the judicial process is in train. FOS like any other organization being sued has to consider whether the application made against it is likely to succeed.

    FOS has in the past in one known cases invited a judicial review application to be made telling the applicant that it will not defend it and in one case (brought by a CMC on behalf of a complainant) agreed not to defend the case after the court gave leave to bring the application.

    Otherwise, it has lost one published case (but only in part and with more harm done to the applicant firm than good – Garrison).

    FOS can be judicially reviewed if it had no jurisdiction, exceeded its powers (both as laid down by FSMA), breached the rules of natural justice or reached a decision that no reasonable Ombudsman could have reached. The Garrison case involved a decision upheld on liability by the Court but where the decision did not award damages for any loss suffered (a requirement of s 229 FSMA) in any sense of the term because FOS awarded a refund plus interest while concluding that an equity-based product would have been suitable.

  5. Wingco, are you suggesting that Berkeley Burke (or any other provider for that matter) should be reviewing cases submitted to them from a ‘compliance’ viewpoint?

    If (as I suspect is the case here) a client approaches them direct then this would require them to do all the things you are listing… which, funnily ernough, is that a regulated adviser would/should do.

    Unless (as suggested above) the role of Berkeley Burke is more than simply recipient of a pension transfer on an (assumed) non advised basis, this is a failing on the part of the client (following non-authorised advice), arguably the ‘adviser’, and the UCIS (another assumption!) provider.

    At our firm, we are often frustrated with providers over stepping their obligations and therefore this stuff worries the hell out of me should providers, as a result, feel the need to become more involved in the ‘advice’ process.

  6. For a decision to be reversed and reconsidered by an ombudsman, my understanding is that both parties have to agree to it.
    What has been offered to the consumer for him to accept a review of the decision which is likely to result in him NOT getting his money back in the original way?
    Has someone else offered to pay him instead if he doesn’t insist on enforcement of the decision? If so WHO.
    Have the FOS offered to pay him? IF so, where has the money come from?
    Has an associate of BB? If so why
    There are many questions the journalist should be asking of the FOS, the consumer and BB as depending upon the answers, there may be a lot more to this story to come yet.

  7. P.S. Did anyone download a copy of the FOS original decision BEFORE it was removed from their website please as it may make interesting reading and could be required as evidence in a court of law at some point.

  8. Some of us read the decision from the database and it will only be used in court if the application receives leave from a judge.

    A decision that is set aside is a nullity and so, no consent of the complainant can make it otherwise. Your comment that consent has been obtained from anyone is nonsense.

    What has happened is that the complainant has presumably accepted the decision and the firm has instead of complying applied for judicial review within the time-limits allowed. Like any organization being sued, FOS has reviewed whether it has done anything to justify the application and therefore whether to defend the application. It probably did not need to remove the decision from the database. However, the FSA suspended its PS on payment protection insurance while it was being reviewed. So, FOS is not doing anything novel in removing the decision while it is subject to a live judicial review application.

    The firm can no doubt provide a copy of the decision and quite possibly FOS as well. Please, though, can we limit the comments on civil procedure, judicial review and FOS from people with limited legal knowledge of all three for me to have to correct.

  9. Can I be the only reader who has already become sick of the holier than thou positioning of Adam Samuel?

    Denigrating posters by promoting his own awesome knowledge of the FOS and judicial system can only work when it is true.

  10. @Adam -I would have read and possibly saved a copy of the decision had I had a chance before it was pulled. Didn’t you save a copy? I try to record as much as I can, especially where it involves officialdom who have a habit of saying one thing and doing something quite different.

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