Supreme Court denies appeal in landmark Carey case

Supreme Court denies appeal in landmark Carey case
Supreme Court in London [Claudiodivizia/Dreamstime]

The Supreme Court has denied permission to appeal in the landmark Carey Sipp case, which raised questions around provider responsibility when accepting investments.

The Supreme Court is the UK's final court of appeal, so its decision not to hear the case potentially ends the long-running saga which related to an investment originally made a decade ago.

Last year the Court of Appeal ruled against STM Group and found in favour of the claimant, Russell Adams, who had lost money after investing in high-risk, unregulated Store First through a Sipp.

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STM Group is the parent company of Options Pensions, which was formerly known as Carey Pensions.

STM had sought permission from the Supreme Court to appeal this decision. But this appeal, it said in an announcement today (April 11), has been denied. 

“The decision does not directly impact STM's exposure in this case, but it will have implications for the financial services industry more broadly”, the company said.

STM said the original case related to an investment made in 2012 - before its acquisition of Carey in February 2019.

It said a condition of the acquisition was the indemnity on any claims in the Adams v Carey case, with the benefit of "significant" existing PI cover held by the sellers.

In its financial results last year, STM set aside £3.6mn to deal with possible future claims as a result of the case. Just over a year ago, the Financial Ombudsman Service had 592 open complaints against Options UK Personal Pensions.

Carey originally won the case, with claims against the Sipp provider being dismissed on all grounds in May 2020.

But in a Court of Appeal decision last year, 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.

It therefore 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.

At the time of the Court of Appeal judgement, Tim Hampson, a partner at Wixted & Co Solicitors who represented Adams, said the decision “will assist many other investors who have lost funds because of investment advice given to them by unregulated parties”.

He added that the decision served as a “fair warning to regulated firms” that, if they chose to deal with an unregulated entity which they cannot necessarily control, then the risk was “squarely on them” if that entity crosses the perimeter and contravenes the general prohibition.

The Supreme Court's decision comes after a difficult year for STM. In November, the company said it expected its revenue to be lower last year due to delays with new business revenues materialising.