Sipp case could fail to be a landmark

Sipp case could fail to be a landmark

The court hearing regarding self-invested personal pension (Sipp) provider Carey Pensions may not be the landmark case many in the industry are predicting, according to a claims lawyer.

Glyn Taylor, a solicitor at Anthony Philip James & Co (APJ), which is bringing a number of claims against Sipp providers for alleged mis-selling, said the case was not ideal for testing the argument that Sipp providers can be liable for losses from taking execution-only business.

This was because the client had been intent on making the investment and the court may find it was just for Carey to establish the Sipp.

If the case is lost, it will therefore not act as a precedent for others where the underlying facts are slightly different, he said.

The Russell Adams versus Carey hearing centres on a claim from a client who invested his £60,000 pension in illiquid commercial property.

He is accusing Carey of colluding with unregulated introducers to facilitate investments which were unsuitable and are now deemed "worthless".

The client had signed an execution-only contract but his lawyers argued regulatory principles around treating customers fairly meant he should have never been allowed to open the Sipp without advice.

The case, which was heard in March and will act as a test case for about 90 more clients with liabilities of £3m, is currently awaiting judgement.

Mr Taylor said: "In this case, there is evidence that the client was intent on making the investment and would have done so regardless of any advice given. 

"It is quite common for the unregulated introducer to offer a cash incentive to the client to invest in a non-standard asset. This happened in the Adams vs Carey Pensions case.

"Therefore, the court could decide that the claimant would have proceeded with the investment in any event due to the cash incentive.

"As a result, I believe that while the judge may find that Carey Pensions did breach its duty to the client, as the client was intent on proceeding with the investment the judge could find that it was just and equitable for Carey Pensions to enforce the Sipp.

"This means that we can’t take a clear steer from the case as to whether other cases against Sipp providers would be successful."

Some in the industry perceived the Carey case as a potential watershed moment in the way Sipp claims are handled, because, if won, it could put liability firmly in the hands of the Sipp provider.

Martin Tilley, director of technical services at Dentons Pension Management, had warned it could lead to scores of providers winding up their operations as they are being pursued for past business written.

Mr Taylor agreed, if found against Carey, the case could have wider ramifications going forward.

But he said the Berkeley Burke Judicial review, heard last week, was potentially more important as it would determine between two levels of due diligence that the Financial Ombudsman Service (Fos) and Financial Conduct Authority (FCA) have said are required of Sipp operators.