SIPP  

Carey owner sets aside £3.6m to deal with claims

Carey owner sets aside £3.6m to deal with claims

The parent company of Options Pensions, formerly known as Carey Pensions, has set aside £3.6m to deal with possible future claims following the recent outcome of the long-running Adams v Carey case.

According to STM Group’s full year results, published this morning (May 11), the company has made an estimate by considering a cohort of claims which may be deemed to have similar characteristics to Mr Adams' claim. 

It said it was difficult to assess exactly how much the company could have to pay out on claims based on the Adams v Carey case because the Court of Appeal has not yet determined the appropriate redress payable to Adams.

STM group stated: “The value of this estimate, which has been reflected within trade and other payables, is £3,600,000. This is covered by professional indemnity insurance and thus has also been reflected within trade and other receivables.”

As of April 8, the Financial Ombudsman Service had 592 open complaints against Options UK Personal Pensions.

In the Court of Appeal’s decision last month (April 1) judges overturned a previous High Court ruling and sided with Adams, who had lost money after investing in high risk unregulated investment Store First via his Sipp.

The judges found 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 was unenforceable against Adams, and he was 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.

However, STM Group has since sought permission from the Supreme Court to appeal this decision.

In its results, STM Group chairman, Duncan Crocker, said the outcome of the case would affect the wider financial services and should be watched closely.

Crocker said: “I continue to watch the developments of the Adams vs Carey case, and believe that further guidance and clarity for Sipp providers, and indeed the wider UK financial services industry which operates in an execution only environment can only be beneficial to all parties. 

“The new case law in the original ruling, and upheld in the Court of Appeal, in relation to Conduct of Business principles will be something that future ombudsman rulings are expected to take into account.”

Elsewhere, the group reported revenues of £24.m (2019: £23.3m) with profit before other items of £3.6m (2019: £3.5m). 

STM Group said while this was a modest growth, it was on the back of an unprecedented year in terms of the global pandemic resulting in new ways of working and financial uncertainty, which had “no doubt impacted our new business levels”.

The group said the Options acquisition made in 2019 had shown “significant revenue growth” in 2020 and the Berkeley Burke acquisition in 2020 was also generating both revenue and profit in the five-month period since acquisition.