Financial Ombudsman Service 

Judge blocks Sipp provider's appeal against Fos

Judge blocks Sipp provider's appeal against Fos

A decision made by a High Court judge means Sipp provider Berkeley Burke's legal battle against the Financial Ombudsman Service may now go to judicial review.

Berkeley Burke had attempted to use an arbitration appeal process to overturn the ombudsman's decision that it would have to compensate a Sipp client.

But Mr Justice Teare did not allow this appeal because he decided the Fos process was not arbitration.

Berkeley Burke is a self-invested personal pension administrator which has been disputing the outcome of a Fos decision where the ombudsman ruled it would have to compensate a client.

Sipp provider Berkeley Burke came under fire for not doing adviser-style due diligence on a client's Sipp investment.

Two ombudsmen found in favour of the client but Berkeley Burke attempted to appeal against their ruling.

The Sipp provider argued the ombudsman's ruling should be treated as an arbitration decision because this could avoid the judicial review route, which the company’s lawyers thought might not be successful.

But Mr Justice Teare said Berkleley Burke could not pursue this route because the Fos was not an adjudicator since its decisions were not necessarily binding on both parties – they only become binding when accepted by the complainant.

He said: “It follows that the ombudsman is not clothed with jurisdiction by the parties to resolve the dispute between them.

“If the complainant chooses not to accept the decision of the ombudsman he is free to pursue his legal remedy, if any, against the respondent in court, notwithstanding the decision of the ombudsman.

“An arbitration agreement means an agreement to submit to arbitration present or future disputes.

“The agreement between the applicant and Mr Charlton did not submit to arbitration the dispute between the parties because Fos, or an ombudsman nominated by Fos, was not clothed with authority to determine the dispute between Mr Charlton and the claimant.”

The issue stems from Wayne Charlton bringing a complaint to the Fos in respect of the loss of his personal pension which he had invested in a Sipp administered by Berkeley Burke in 2011.

The investments in the Sipp included an interest in Sustainable AgroEnergy PLC, a company which purported to extract biofuel from trees grown in Cambodia.

In 2012 Sustainable AgroEnergy PLC entered receivership following intervention by the Serious Fraud Office as part of a criminal investigation.

In 2014 the ombudsman upheld Mr Charlton's complaint which he accepted as the final determination of his claim.

Berkeley Burke maintained it had not given any advice to Mr Charlton and said it intended to seek judicial review of the ombudsman's decision.

It was then agreed that Mr Charlton's complaint would be reconsidered by another ombudsman without the need for a formal court order quashing the decision.

A new ombudsman, Colin Brown, found in favour of Mr Charlton in February 2017 and the decision was accepted.

Berkeley Burke issued an application seeking judicial review of Mr Brown's decision but stayed it pending the determination of the claim under section 69 of the Arbitration Act 1996.