Carrying out due diligence on investments would have prevented a self-invested personal pension (Sipp) provider from complying with Financial Conduct Authority rules, a court has heard.
Berkeley Burke hit the headlines earlier this year when they were accused of 'mis-selling' Sipps.
The company is now fighting a decision made in 2014 by the Financial Ombudsman Service ordering the company to repay Wayne Charlton after he lost part of his pension to a fraudulent company, Sustainable AgroEnergy.
Representing the company Jonathan Kirk QC said Berkeley Burke's primary obligation was to carry out the instructions of its clients under the FCA's Conduct of Business Sourcebook.
Mr Charlton had instructed the company to invest in Sustainable AgroEnergy, so the duty to execute instructions took primacy.
"The question that is to be asked is, 'Alright, so they had a duty, why is that incompatible with the duty of enquiry?
"The answer is the duty is premised on you doing what you are told because if you don't execute then you run the risk that the product will become unavailable or the price will change."
Mr Kirk explained that if the company had investigated Sustainable AgroEngergy to determine whether it was a good investment then that duty laid out in the FCA Sourcebook would have been impossible to achieve.
"There would have been significant delay in executing the transaction and that would have been incompatible with the duty."
He went on to argue the Financial Ombudsman Service cannot correctly adjudicate in such cases if its understanding of the relevant legislation was faulty.
"The ombudsman must get the law right, we say in this case he misunderstood the law.
"It is a matter for the courts to interpret the law and if the ombudsman has failed to get that right he will have made an error of law.
"We are not saying that the decision was irrational in that no one could come to that conclusion, it is a question of how it fits into the duties."
Mr Kirk argued that the Fos also has a duty to judge companies by the existing standards within the sector rather than the standards they would like to see imposed.
"Of course the ombudsman can consider whether somebody has breached the standard but the ombudsman must have determined the standards correctly."
He argued that the disputes service had failed to judge Berkeley Burke on the standards by which other Sipp providers had carried out their dealings.
Mr Charlton brought a complaint to the ombudsman in 2011 after losing part of his pension with Sustainable AgroEnergy, which promised returns of between 8 and 9 per cent.
The company purported to provide agricultural land leases in Cambodia, where they would grow jatropha trees for biofuel.
But in 2012 the company was investigated by the Serious Fraud Office and went into administration.
The hearing continues.