Carey Pensions has called on the Financial Ombudsman Service to consider the law and take into account the recent Adams v Carey decision when dealing with future complaints, after the ombudsman found against the provider in a similar case.
The Fos ordered Carey, now known as Options, to compensate a client after it found it had not carried out adequate due diligence before accepting a self-invested personal pension application from an unregulated introducer.
However, the Fos's decision was made before the judgment in Adams v Carey had been handed down last month (May 18) as the ombudsman did not deem it right to wait for the judgement due to it being “a different case” and “not party to those proceedings”.
But Christine Hallett, managing director of Options, criticised the Fos claiming it had not considered the law fully in its decisions and said its process for deciding self-invested personal pension complaints was “flawed”.
Ms Hallett told FTAdviser: “While we of course abide by Fos decisions, we have long-standing concerns regarding the process involved which we have expressed in our dialogue with Fos.
“We believe this latest decision is another example which illustrates that the process is flawed because it does not consider all the pertinent facts of the case.
“We have registered our concerns with Fos because we believe that now the Adams v Carey judgment has been determined then Fos must take it – and other relevant future cases – into consideration.”
Martin Tilley, pension director at Hurley Partners, said while the Fos did not have to take the Adams v Carey case into account in this decision, it will have to consider the findings of the case in decisions going forward.
However, he warned there may continue to be a difference in how the Fos believes Sipp providers should operate and what the High Court deems lawful.
Mr Tilley said: “We would seem to have an impasse and difference currently over what the law required (and therefore a company being deemed to be lawful) and what the ombudsman deems to be fair and reasonable.
“If the ombudsman does find in favour of Sipp providers in future cases, we could have a bizarre situation where depending upon the date by which a case was brought to the ombudsman, almost identical cases could get different outcomes.
“The situation is not at all ideal for consumers, nor for that matter any operative in the financial services market and it highlights areas of concern between law and regulatory interpretation and guidance.”
Rachael Healey, partner at law firm RPC, also believes the industry will see a difference in Fos decisions going forward.
Ms Healey expects the Fos to revisit its approach to decisions involving Carey and Sipp providers more generally given Fos's “obligation to do so under the dispute resolution rules which set out how they must adjudicate complaints” - in particular, its obligation to take into account the law and “explain their reasoning should they depart from it”.
Meanwhile, Glyn Taylor, support lawyer at APJ Solicitors, said the Adams v Carey case and the recent Fos decision considered different issues.
Mr Taylor said: “In any event Fos is not bound to strictly follow the law when making its determinations but must instead make decisions that are fair and reasonable in all the circumstances.
“The law in this regard has not changed since the Adams v Carey judgment. I therefore expect Fos to continue making similar decisions where Sipp operators have accepted high volume business from unregulated firms promoting high risk unregulated investments.”
But the Fos said it will take into account the law when making future decisions.
A spokesperson said: “The High Court has already upheld our approach to Sipp complaints in the Berkeley Burke case.
“We will consider the judgment in the Carey case and continue to take relevant law, including case law, into account when resolving complaints.”
Ms Hallett said the Fos will need to take into account case law so that “Options and other reputable providers can not be held responsible for the failings of the client’s decision or the investment they have chosen”.
She added: “That is the only fair and reasonable outcome going forward following the Adams v Carey judgment.”
amy.austin@ft.com
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