Sipp provider Carey Pensions is facing a fresh legal challenge from a client over its alleged failure to undertake the required due diligence when accepting investments.
Solicitors Anthony Philip James & Co (APJ) are bringing a case on behalf of a client referred to as Mr R, who they claim lost £30,000 after investing into Green Oil Australia, an unregulated collective investment scheme, through the Carey Pensions Sipp.
The provider is currently embroiled in a court case with an investor who argued it had a duty of care towards him when allowing him to set up a Sipp to make unregulated investments, despite the sale being classed as execution-only.
Carey argued it was not responsible for the client’s failed investments as he invested on an execution-only basis and signed a contract saying this was his choice.
In the case brought by APJ, Mr R made the choice to invest based on advice from an unregulated introducer who cold called him.
In 2015, the client brought his case to the Pension Ombudsman Service, who found that that he was poorly advised by the unregulated introducer, and that it was questionable whether a Sipp was the appropriate pension vehicle for a fund of £30,000 or if Green Oil Australia was a suitable investment for his circumstances, APJ stated.
The ombudsman concluded that the Financial Conduct Authority (FCA) guidance that Sipp providers monitor and bear responsibility for the quality and type of business introduced to them did not apply in Mr R’s case, the solicitors added.
In May, the FCA made a submission to court in the Berkeley Burke case, in which it argues that a Sipp provider has a duty to vet investments before they can enter their products.
APJ is arguing that the ombudsman decision directly conflicts with the regulator's submission, and is now seeking compensation from Carey Pensions.
Christine Hallett, chief executive of Carey Pensions, told FTAdviser that no formal court proceeds have been brought yet, so she has no knowledge of the fresh case.
Glyn Taylor, solicitor at APJ, said: “In their written submission in the Berkeley Burke judicial review, the FCA specifically states that at all material times, the Financial Services Authority's thematic review report in 2009 highlighted that the failure to undertake due diligence is a breach of the regulatory rules to act honestly, fairly and professionally.
“We expect the court to uphold the decision made against Berkeley Burke, therefore we are confident that a court will also find Mr R was failed by Carey Pensions.”
FTAdviser reported yesterday (9 October) that STM Group has bought a majority stake in Carey Pensions.
maria.espadinha@ft.com
