Self-invested personal pension specialists have cast doubt on Liberty Sipp's reliance on the Carey outcome to invalidate any outstanding claims against the provider.
Martin Tilley, director at Hurley Partners, and Richard Mattison, director at Whitehall Group, said although the outcome of the Adams v Carey Pensions case may affect future claims against Sipp providers, it was “highly unlikely” it will have a direct impact on Liberty Sipps’ outstanding claims as the circumstances differ.
In a statement on Companies House, the administrators of Liberty Sipp said the company was unlikely to be saved due to the extent of possible creditor claims.
But, the statement added if contingent claims were deemed to be invalid, then “following the decision in Adams v Carey Pensions (pending any appeal) and subject to the FSCS decision on update policies following these decision”, Liberty Sipp may be able to repay all the creditors in full.
However, Mr Tilley said this would depend on the nature of the claims as the circumstances are likely to be different and therefore the judgment will have little impact.
He said: “The Carey case has figuratively put a spanner in the works and may have the effect of paralysing future claims determinations. As said, those undetermined claims with similar features may now be found in favour of the Sipp provider.
“Those that have gone previously and been determined are unlikely to be changed and certainly won’t be unless any appeal fails and we could be months/years away from that.
"We have to drill down and look at the claims in detail. For example, the Carey case was specific in that an asset was acquired, whereas I understand Liberty held a degree of Sustainable Green agroEnergy which was a scam and for which monies should not have been released.
“If Liberty for example have a book of these, whatever happens in the Carey judgement will have little impact.”
There is also the problem that the Carey case could be subject to an appeal in which the current judgment could be overturned.
Mr Tilley added: “The Carey case may be a glimmer of hope for the Sipp providers in trouble, but until we see whether or not an appeal is made and is successful and where we have a material change in approach from Fos and latterly the FSCS it’s probably too early to tell.”
Whitehall Group's Mr Mattison agreed that it was “unlikely” Liberty Sipp’s claims would be found invalid purely on the back of this judgment.
He also noted that even though Carey won this case, it has recently lost a number of Fos decisions.
It is likely the Liberty Sipp situation is more akin to these and “the administrators' only options will be to put the company in liquidation”, according to Mr Mattison.
He added: “I expect the regulators to basically ignore the Adams case and consider it to be a one-off whilst continuing their policy of reaching decisions against Sipp providers.
“This all inflames the debate about where a pension company’s responsibilities start and end. Was it really Carey’s fault that these investments failed? The irony is that if they hadn’t failed and everyone had made money then none of this would have happened.”
In the Carey case, the High Court case saw claims against the provider dropped on all grounds after former client Russell Adams claimed Carey Pensions mis-sold him a Sipp.
He and his lawyers had accused the Sipp provider of using a Spain-based unregulated introducer to facilitate investments in Store First unit pods, which were unsuitable and subsequently deemed “worthless”.
Liberty places blame on CMCs
The Liberty Sipp Limited business and customer assets were sold to EBS Pensions Limited, part of the Embark Group, in October 2018, which then rebranded the Liberty Sipp as the Option Sipp.
However, the legal entity Liberty Sipp Limited was not part of the sale and retained its liabilities. It consequently had to pay out against any complaints using the assets it held.
Following this, the company saw turnover drop to £1.5m and recorded a loss of £346,000 in revenue for the period ended September 2019.
Directors of Liberty Sipp have claimed claims management companies were partly to blame for its downfall, after their pursuit of claims led to the company losing business.
In the administrators' statement, directors said the company was on the receiving end of a "sustained campaign in the press" prior to entering administration.
The directors said this damaged the provider’s reputation and, despite having the support of a number of IFAs, led to a gradual drop-off in sales. This, combined with their concerns over the then-pending outcome of the Carey Pensions court case, prompted them to seek a sale of the company.
amy.austin@ft.com
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