The chief executive of the Financial Conduct Authority has urged providers of self-invested personal pensions (Sipps) to let the regulator know if they are affected by the rulings of the various High Court claims currently being considered.
Andrew Bailey sent a letter to the chief executives of Sipp providers after the High Court dismissed a case brought against the Financial Ombudsman Service by Sipp provider Berkeley Burke.
The case saw Berkeley Burke fight a decision from 2014, in which the Fos ruled the Sipp provider had to compensate a client after it failed to carry out adviser-style due diligence on his investment.
The dismissal means the ombudsman's ruling stands, though it is now open to appeal by Berkeley Burke.
A judgement is still pending on the Carey case, where the judge is considering the same issue of due diligence.
Mr Bailey said: "Pending the outcome of any appeal of today’s judgment and these other cases, we expect you to consider the potential implications of them for your firm and its customers. We will be contacting Sipp operators to discuss what these may be.
"If the outcome of any of these cases calls into question your firm’s ability both now and in the future to meet its financial commitments as they fall due, you must notify the FCA immediately. Where relevant, firms should also notify claims to their professional indemnity insurers in accordance with their policies."
The issue in the Berkeley Burke case stems from client 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.
Berkeley Burke maintained it had not given any advice to Wayne Charlton and said it intended to seek judicial review of the ombudsman's decision.
An initial decision by the Fos upholding the complaint had conflicted with a decision previously provided by the Pensions Ombudsman which had similar facts.
Berkeley Burke had argued the Fos had erred in law by finding the firm had not been required to execute Mr. Charlton's specific instructions in accordance with Cobs rules and by failing to follow previous decisions of the Pensions Ombudsman.
The case was heard in the High Court over three days earlier this month. The judge ultimately ruled the Fos was right in considering the merits of the case independently of previous cases heard by other ombudsmen.
He also said the Fos was right in its interpretation of FCA rules and principles to come to its decision of what is 'fair and reasonable'.
Mr Justice Jacobs said: "[The ombudsman] considered that he needed to make up his own mind on the basis of the facts of the case that were before him, and the statutory framework in which he was operating. For the reasons given above, this approach was correct and did not involve any error of law.