FTAdviser understands the Fos’s work on these cases has been ongoing, against the backdrop of the landmark Adams v Carey case, which came to a close last week (April 1).
Carey has come under fire in previous Fos decisions with regards to accepting business from unregulated introducers.
But Christine Hallett, managing director of Options, said its parent company STM Group has secured indemnities and has PI cover to deal with its exposure to the latest round of Fos cases.
Hallett said: "At the time of acquiring Carey Pensions in February 2019, STM announced that it 'noted that Carey Pensions was party to a high profile Court case (the 'Adams' case).
"STM has secured indemnities and the benefit of significant existing PI cover from the sellers and considers any residual exposure to this and any other historic industry issues, to be minimal.
"The appeal judgment does not change that position, with any cost excesses of the policy having previously been expensed within the normal course of business.”
She added: “Whilst we acknowledge there are a number of cases outstanding, it’s important to recognise that the appeal in itself did fail in its entirety and as expected the Court of Appeal upheld the judgement of the first instance that Carey had met all its obligations under the Conduct of Business principles (COBS2.1.1).
"This means that the HHJ Dight’s approach to determine the scope of COBS rules remains good law."
In the Court of Appeal’s decision last week judges overturned a previous High Court ruling and sided with the claimant who had lost money after investing in high risk unregulated investment Store First via his Sipp.
The judges found claimant Russell Adams had been advised, in contravention of the Financial Services and Markets Act 2000, by CLP Brokers, an unregulated introducer.
The court said at no time was CLP authorised by the Financial Conduct Authority to give investment advice, or to make arrangements relating to investments.
The court declared that, because the Sipp was entered into as a consequence of CLP’s actions, the Sipp agreement is unenforceable against Adams, and he is therefore entitled to ‘unwind’ it and recover the money he paid into it, as well as compensation to reflect the losses he has suffered as a consequence.
Carey had originally won the case in the High Court with claims against the Sipp provider being dismissed on all grounds in May 2020.
Earlier this year (February 26) the Fos issued a decision which took account of the High Court judgment in the Adams case before the Court of Appeal hearing took place.
In an 81-page decision, the ombudsman concluded Carey should have refused to accept the business from an unregulated introducer, which included a high-risk unregulated investment.
The Fos said had Carey acted in accordance with its regulatory obligations and best practice, it should not have accepted the client’s application from the introducer to open a Sipp at all.
FTAdviser understands that any further decisions issued by the Fos will continue to take the relevant law into account, including the Court of Appeal judgment.
amy.austin@ft.com
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