Berkeley Burke, the self-invested pension firm at the centre of a complex legal wrangle over a landmark ombudsman decision, has told FTAdviser the offer made by the service to rescind and review its original ruling is “an unprecedented solution which has no basis in law”.
The firm, which lost a case at the Fos over an unregulated investment in a landmark ruling that some interpreted as meaning Sipp operators would need to undertake adviser-style due diligence, told FTAdviser it intends to launch a judicial review whatever the outcome of the second decision.
Fos’s original decision, which was published on its online database but was later removed, ruled the firm had failed to carry out adequate due diligence by allowing a consumer to invest nearly £25,000 in 2011 in a bio-energy firm which ultimately collapsed amid allegations of fraud.
Berkley Burke argued the decision is flawed because it is not authorised to give investment advice.
In the wake of a judicial review process being initiated, Fos announced it would review the decision - and told FTAdviser it had received written confirmation from the claimant not to enforce the original verdict.
However, some experts questioned whether Fos has the legal authority it overturn a ruling which was accepted and is therefore “final and binding on both parties”.
In a statement, Berkeley Burke said: “The final decision is still binding until overturned by a court; Fos have no power to overturn their own final decisions.”
The firm regards the second decision yet to be made as an ‘alternative’ decision, believing the original ‘final’ decision could still be enforced. It is making fresh representations as part of the new Fos process, but has affirmed it will seek a judicial review irrespective of the outcome.
A Fos spokesperson previously confirmed to FTAdviser that the decision was accepted, but that the complainant has given “permission” for the case to be reviewed. The service said it could not comment further at this time as the case is ongoing.
Berkeley Burke stated it had no choice but to launch the judicial review as it did not have support from its professional indemnity insurer or, in the initial stages, from its trade body the Association of Member-Directed Pension Schemes.
Berkeley Burke added it was clear “that if the decision was allowed to stand then the whole of the Sipp provider industry could be brought to its knees, as well as the specialist PI Insurance market”.
Having issued the pre-judicial review letter that set out its case, the Sipp provider says it was approached by Fos, which asked it to halt proceedings and to agree to the complaint being referred to a second ombudsman.
The firm added: “Berkeley Burke pointed out that there was no basis in law to submit the case for a second decision, and even if the second ombudsman overturned the original decision Mr A was still legally able to claim for compensation.”
donia.o’loughlin@ft.com
