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What the Carey Pensions decision really means

What the Carey Pensions decision really means
Credit: Unsplash

After much speculation, the Supreme Court finally decided last month to refuse leave to appeal the Court of Appeal’s April 2021 judgment in the long running Carey Pensions saga.

The Carey decision has taken the self-invested personal pension industry on a rollercoaster ride with diametrically opposed decisions between the High Court and the Court of Appeal.

The refusal means the Sipp industry should now revisit and carefully reflect on the Court of Appeal’s decision and what it means for the industry and regulated businesses more generally.  

A long-running saga

The facts of the long-running proceedings are by now well-known. 

Looking to release cash from his pension, on a recommendation from Spain-based introducer CLP Brokers Sociedad Limitada, Russell Adams transferred his Friends Life pension pot into a Sipp administered by Carey Pensions UK LLP, and instructed Carey to invest his fund into unregulated investments (leases of store pods), which performed very poorly.

Adams brought proceedings in March 2015 against Carey, which is regulated by the Financial Conduct Authority, to recover the losses on his investment.

Adams claimed that:

  1. There had been a breach of section 27 of the Financial Services and Markets Act 2000 that rendered the Carey Sipp agreement unenforceable;
  2. That Carey had breached its duty under Cobs 2.1.1R to act “honestly, fairly and professionally in the best interests of the client"; and
  3. That Carey shared responsibility for CLP’s negligent advice as a joint tortfeasor.

In a judgment issued some 26 months after the proceedings in the High Court, Judge Dight found for Carey, rejecting all three of Adams' arguments.

Leave to appeal was then granted to Adams on the first two points. Adams’ allegation of a breach by Carey of its obligation under COBS 2.1.1R failed, as the Court of Appeal found that he was trying to raise broader allegations on appeal than had been relied on in the original hearing.

However, the Court of Appeal unanimously found for Adams that there had been a breach of section 27.

Breach of section 27 entitles the non-FCA-authorised person to recover money paid under the agreement and to seek compensation for loss.

Breach of section 27 

Adams had argued that his Sipp arrangements with Carey came about as a result of CLP carrying out the regulated activities of advising on investments and arranging deals in investments.

Section 27 of FSMA can render an agreement unenforceable if the agreement comes about as a result of an unauthorised third party carrying on regulated activities. CLP was the unauthorised third party in this case, bringing about the arrangements between Adams and Carey.


Adams argued that CLP’s unauthorised advising and arranging activities breached section 27, with the result that Carey could not enforce the Sipp arrangements with Adams.

In weighing Adams’ argument, the Court of Appeal first had to consider what amounts to 'advice' and whether CLP provided regulated investment advice for FSMA purposes.

While Adams’ Friends Life policy and the Carey Sipp were regulated investments, the investment in store pods was not. Did the fact that CLP advised on unregulated investments mean that it did not give regulated advice?

The court agreed that advice on an unregulated investment could form part of a "single braided stream of advice" where the unregulated investment could only be bought by selling a regulated investment.