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Berkeley Burke administrators drop appeal case

Berkeley Burke administrators drop appeal case

The administrators of the Berkeley Burke Sipp have dropped the appeal case scheduled for this month, after failing to get sufficient backing to cover the potential cost.

Berkeley Burke has been fighting a Financial Ombudsman Service decision from 2014 which ordered it to compensate a client after it failed to carry out adviser-style due diligence on his investment.

But in a judicial review in October 2018 the High Court sided with the Fos meaning the ombudsman's initial decision stood. 

In February 2019 the Court of Appeal granted Berkeley Burke permission to appeal the ruling, claiming the decision was potentially one of "considerable and wider importance within the industry and for customers".

But in a statement today (October 4) the company confirmed the appeal, which was scheduled for two days in October, will not go ahead. 

Berkley Burke said it had secured more than £100,000 from across the financial services industry to fund the case, which would have been "considerably more than enough to cover [BB Sipp Administration Limited's] costs for a two-day hearing".

But the funds would have been short of the "total potential legal costs" faced if the Sipp provider lost its appeal, it added.

Despite this it expressed concerns over the administrators' decision to drop the case, warning it would create a considerable burden on the FSCS.

The Berkeley Burke group has no ties to the now defunct Sipp business, which entered administration last month after it could no longer afford to defend redress claims made against it in respect of alleged due diligence failings when accepting high risk investments between 2010 and 2012.

The functioning Sipp book was sold to Hartley Pensions in a pre-pack arrangement and any claimants directed towards the Financial Services Compensation Scheme for potential redress.

But a spokesperson for the Berkeley Burke Group said the company had decided to fundraise to cover the costs of the appeal in response to "considerable concerns" raised by the industry.

They said: “Berkeley Burke Group decided to try and raise legal funds to allow for the administrators to continue with the appeal to the Court of Appeal, after unprecedented support from independent FCA regulated firms unconnected with the litigation who wanted to see the appeal go ahead.”

The spokesperson added: "It is thought that a successful appeal at the Court of Appeal may have mitigated the need for the FSCS to make pay-outs in relation to the company in administration.

"That the appeal will not now be heard despite being listed, is therefore of considerable regret to many FCA-regulated firms across the savings and investment industry, in particular but not limited to those operating execution-only services, among whom those who in addition gave their individual financial backing and support to enable the Court of Appeal process to continue after BBSAL entered administration."

The original Fos decision ordered Berkeley Burke to repay Wayne Charlton after he lost part of his pension to unregulated investment Sustainable AgroEnergy, which had promised returns of between 8 and 9 per cent.