Sipp hits back at introducer collusion claims made in court

Sipp hits back at introducer collusion claims made in court

Carey Pensions has hit back at allegations it colluded with an unregulated introducer to put high-risk investments into its self-invested personal pensions (Sipp).

In a hearing today (22 March) at the High Court in London, the Sipp firm’s legal team alleged lorry driver Russell Adams knew of the risks he was taking in investing his £50,000 pension into storage pods from Store First, which later lost the majority of their value.

The court heard Carey had warned Mr Adams about the specific risks to his pension but he nevertheless instructed the Sipp firm to carry out the pension transfer because he wanted the £4,000 incentive offered to him by the introducer CLP.

What’s more, Carey claimed, in order to go around HMRC rules the client asked for the £4,000 to be put into his wife’s account.

The barrister acting for the Sipp firm said: "[Mr Adams] was warned by Carey [...] that the investment was high risk and speculative.

"[Mr Adam] had instructed Carey because he wanted the inducement."

Carey argues the loss was caused by the high risk investment, not the pension transfer or any collusion between Carey and CLP.

The defence barrister said the Financial Conduct Authority's conduct of business sourcebook does not instruct Sipp firms to identify and stop high risk investments.

If the FCA had wanted Sipp providers to require advice on high risk or speculative investments it should have said so before, the court heard.

But Mr Adams's lawyers this morning said FCA regulation as well as statutory rules were designed to protect consumers and would not allow regulated entity Carey to rid itself of its responsibility towards its client by arguing it was an execution-only transaction. 

In this afternoon's session the court also heard from Carey's lawyers that "there is no evidence" Mr Adams' money was not put into a "scam", as suggested by Mr Adam’s legal team earlier in the proceedings.

"If it was a scam the claimant was a willing participant in the scam. He received the £4,000 inducement," the Sipp firm's barrister said.

In this morning's session, lawyers for Mr Adams argued Carey was wrong to allow him to invest in a Sipp unadvised, let alone in the unregulated investments underneath it. 

The court heard the transfer of the client's pension was what caused the losses and Carey had the opportunity to stop this at any point.

Carey is accused of failing in three ways: breaching Section 27 of the Financial Service and Markets Act 2000 by establishing a Sipp after an unregulated third-party firm advised on the transfer for the sole purpose of investing in the storage pods; breaching the FCA COBS rules that dictate a firm must act in the client’s best interest; and operating a joint enterprise with an unregulated introducer.

Mr Adams' case will be used as a test case for about 90 more clients with liabilities of £3m, according to his lawyers.