The impact of Carey pensions case on the Sipp market

However, from Carey’s evidence it was very clear that it had focused entirely on due diligence from an HM Revenue & Customs standpoint.

The judge rejected the argument that the investment due diligence was inadequate and tellingly also quoted from a then FSA letter to Carey Pensions in 2011 following a visit that highlighted the “robust processes” that Carey Pensions had in place “to ensure that customers are treated fairly”.

The judge was also quite dismissive of the argument that the guidance provided by the FSA/FCA in its thematic reviews should be viewed in the same light as the Cobs rules and said the guidance “cannot give rise to a claim for failing to follow the suggestions which it makes”.  

Future of Sipps

So where does this leave the Sipp market?

Both the Carey Pensions case and the Berkeley Burke case deal with events that took place more than eight years ago.

The issues raised do not necessarily apply to future investments within Sipps. However, it is important now that the FCA engage with Sipp operators and the advice community to clarify matters.

The FCA has consistently balked at defining what is a “suitable” or “appropriate” investment.

Perhaps now it will accept that such a definition would be helpful.

Some time ago I suggested that a simple approach would be to limit the availability of NSIs to ‘sophisticated investors’ or ‘high-net-worth individuals’ – similar to the regime applicable to Ucis.

‘Standard’ investments should be deemed appropriate for all. I also believe some more detailed guidance on the due diligence requirements would be helpful. Under my proposal that would only be needed for NSIs.

Of course, these proposals would not help solve the problems of the past.

Shortly before the Carey judgment was published a claims management company brought a complaint against Carey Pensions to the Fos. The circumstances of the Fos determination (decision reference 2076425 April 8 2020 Mr. T v Carey Pensions) were very similar to the Adams case, and yet the Fos found in favour of Mr T on the basis of the “fair and reasonable” criteria. 

Reading the Fos determination the conclusions reached in a number of areas were at odds with the judge’s comments in the Adams case. I can only conclude that in reaching their determination the Fos concluded that regulatory requirements did override the contract terms.

 I am also concerned the Fos has been judging Sipp providers with the benefit of hindsight, ignoring the applicable law and industry practice at the time the events occurred.


All of this leads me to conclude that CMCs, who have been actively encouraging multiple Sipp claims, will look to avoid courts of law and instead seek increasing numbers of Fos determinations where as mentioned above the criteria are different and less demanding.