Fos reveals Sipp due diligence complaint mountain

Fos reveals Sipp due diligence complaint mountain

The Financial Ombudsman Service (Fos) has received 1,000 complaints in relation to the duties and responsibilities of self-invested personal pension providers.

The ombudsman told FTAdviser the complaints were received this calendar year and would be processed "in line with our statutory duty".

It would not say how many, if any, of those cases had been halted in light of the recent judicial review against it, which concluded last month.

Article continues after advert

The ombudsman won a case in the High Court on October 30 in which it was ruled the service had rightfully told Sipp provider Berkeley Burke to compensate a client after it had failed to carry out adviser-style due diligence on his investment back in 2011.

The judge said it was a Sipp provider’s duty to check the underlying investment was a suitable investment for a client.

A spokesperson for the ombudsman told FTAdviser: "The court found that the ombudsman was entitled to uphold this particular complaint in accordance with his fair and reasonable jurisdiction.

"We received around 1,000 complaints this calendar year about Sipp provider responsibilities. Some of these cases are quite complex and involve many different parties. 

"We are progressing cases in line with our statutory duty and each complaint will be decided on its particular facts."

Berkeley Burke, which had brought the review, argued the ombudsman had erred in law by exercising powers it did not have and had freely interpreted FCA rules.

The provider is seeking leave to appeal the decision and warned the ruling was out of line with regulation and could have consequences for all providers of execution only services.

A spokesman for Berkeley Burke said: "The company maintains that the ruling of the Financial Ombudsman Service in this case is based on a fundamental misinterpretation of the duties of a Sipp administrator, as set out in the FCA Cobs, which go beyond both the clearly stated duties and intentions of the act [Fsma] and the rules and principles prescribed by the FCA Cobs, both in relation to this and all similar Sipp administrators, and more broadly to any FCA regulated financial services firm offering execution-only services."

Shortly after the ruling was handed down the Financial Conduct Authority published a letter to providers urging them to check their potential financial exposure to similar claims.

Andrew Bailey, chief executive of the FCA, said: "Pending the outcome of any appeal of today's judgment and these other cases, we expect you to consider the potential implications of them for your firm and its customers.

"If the outcome of any of these cases calls into question your firm's ability both now and in the future to meet its financial commitments as they fall due, you must notify the FCA immediately.

"Where relevant, firms should also notify claims to their professional indemnity insurers in accordance with their policies."

The Pensions Ombudsman, meanwhile, said it was awaiting the outcome of a similar case, Adams versus Carey Pensions, which was heard in the spring.