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Sipp provider faces uncertain future as more complaints come in

Sipp provider Carey Pensions has been accused of due diligence failings over an unregulated investment firm in the latest in a string of Financial Ombudsman Service complaints.

Carey posted a loss of £153,800 in 2016 due to an increase in claims. The firm said the loss was due to “a number of complaints and legal cases relating to some historic business which is now being run down” and says these “relate to investments into Sipp made on an execution only basis in the period 2011-13”.

In a FOS decision seen by Money Marketing, the business is criticised for taking a “piecemeal approach” to due diligence in its dealings with unregulated Spanish business Commercial Land and Property Brokers.

The FOS says if Carey had carried out appropriate due diligence at the start of its dealings with the firm, it would have discovered its director Terence Wright was on the regulator’s “persons to avoid” list.

The complaint investigated by the FOS found that Carey had raised concerns that Commercial Land was offering consumers cash incentives for transferring their pensions twice before terminating its agreement to do business with the firm.

One consumer, who was cold-called by Commercial Land, transferred their pension cash value into a Sipp, which was then invested in unregulated investments after being “promised big returns”.

These were Storefirst, a UK self-storage unit facility, and Gas Verdant, which offered returns from plots of farmland in Australia.

Carey said it could not be responsible for the decision to transfer the pension because it is was made on an execution-only basis and it not permitted to provide advice.

The firm, which set up an agreement with Commercial Land in August 2011, carried out due diligence including a background check on two of the firm’s representatives; speaking to the firm in December 2011 about the high portion of business it had introduced which related to the transfer of final salary schemes and the payment of “cash back” incentives; and asking for a copy of its accounts and passports of the directors in March and April 2012.

The FOS says that while Carey did carry out “significant” due diligence, it took a “piecemeal approach”, accepting business from Commercial Land in the meantime.

It says: “[Carey] should have done all of these things before accepting business from Commercial Land. I believe if it had carried out the above actions at the outset, it should have concluded it shouldn’t accept business from Commercial Land.”

It adds that had the firm carried out due diligence, it would have seen an FSA warning about Commercial Land director Terence Wright. In October 2010, the regulator published a warning about Wright that he had been providing financial services or products in the UK without authorisation.

The FSA said he was “not authorised by us but has been targeting people in the UK.”

Carey terminated its agreement with Commercial Land in May 2012, ten days after it conducted a background check on Terence Wright.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. If you say “execution only” to FOS it will be taken not as a defence but an instruction as to what you want them to do with you.

  2. https://www.jameshay.co.uk/media/4159/partnership-sipp-permitted-investments-list.pdf sets out the range of investments permitted via James Hay’s SIPP. Any SIPP provider not using a similar list, and refusing point blank to accommodate anything outside it, is all but inviting trouble further down the line.

    Why, as a SIPP provider, would you want to get involved with anyone who’s been conned into believing that they can somehow defy the laws of economic gravity by investing in wildly off-piste direct investments, particularly overseas ones?

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