Regulation 

Sipp provider blames FCA register for faulty due diligence

Sipp provider blames FCA register for faulty due diligence

A provider of self-invested personal pensions which has had its due diligence process criticised by an ombudsman has blamed the Financial Conduct Authority's database for it not being able to carry out the proper checks.

Carey Pensions found itself on the wrong end of a decision by the Financial Ombudsman Service after a client invested in storepod firm Storefirst and Australian farmland via Gas Verdant through one of its Sipps.

The client was introduced to Carey Pensions by an unregulated Spanish business called Commercial Land and Property Brokers (CL&P) and ones of its directors, Terence Wright.

An ombudsman has now ruled that Carey Pensions must pay an amount into the Sipp so the transfer value is increase to the notional transfer value of the pension plan before it had been transferred.

The Fos ruled Carey Pensions should have carried out background checks on CL&P's directors, Mr Wright and Lesley Wright, because the former has had a warning against his name since 2010.

Christine Hallett, the chief executive of Carey Pensions, said the company did carry out such checks.

She said: "We did an FCA search and on the FCA website at this time, and we are talking in 2012, nothing would come up because you had to put in Terry Wright. We had searched for Terence Wright.

"The ombudsman decided we should have put in all the variations.

"When we identified he was on the watchlist we stopped doing business with them."

Ms Hallett said the FCA has only recently updated its register to include the warning under Mr Wright's full name.

The register currently shows Mr Wright under both Terry and Terrace has been involved with "a firm that we have been told is either operating regulated activities without the correct authorisation, or is running a scam".

"We strongly suggest you avoid dealing with unauthorised firms like this."

In 2010 the FSA published a warning on its website which said Mr Wright had been providing financial services or products in the UK without authorisation.

Carey, which provides execution-only Sipps, was approached by CL&P in August 2011 and agreed to accept introductions before terminating its agreement in 2012.

The complainant said they were cold-called by CL&P, which promised big returns on their investment. The pension saver then signed a Sipp application form requesting the transfer of their pension to a Carey Sipp.

An ombudsman ruled that Carey should not have accepted the referral from CL&P, which would probably have deterred the complainant from making the investments at all.

Carey was told to obtain the notional transfer value of the previous pension plan on the date of calculation if it had not been transferred to the Sipp and pay an amount into the Sipp of the transfer value is increased to this level.

Carey was also told to pay a commercial value to buy the Gas Verdant and Storefirst investment.

Ms Hallett said Carey did conduct due diligence on the investments to make sure they complied with HM Revenue & Customs' rules and on the strength of the two companies.

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