Carey Pensions: When is a Sipp provider liable?

  • Describe the main issue the Carey Pensions case hinged on
  • Explain what differentiates this case from the Berkeley Burke case
  • Identify the implications of the ruling for the Sipp industry
Carey Pensions: When is a Sipp provider liable?

In a judgment that has attracted much attention, the High Court has rejected a claim by scheme member Russell Adams that his Sipp provider, Carey Pensions, should compensate him for an investment in store pod leases which turned out to be worth only a fraction of what his Sipp paid for them.

The case required the court to consider to what extent a Sipp provider operating on an "execution-only" basis has any liability for bad investment decisions by its members, in particular where the member has been introduced to the Sipp provider via an unregulated introducer.

In this article we consider where this leaves the question of who is responsible when a member's Sipp investment goes wrong.


In 2012, Mr Adams responded to an advertisement by an unregulated business (known as "CLP") which suggested he could release some cash from his pension. Mr Adams was persuaded by CLP to transfer his pension fund of approximately £50,000 into a Sipp in order to acquire store pod leases.

CLP recommended Carey Pensions as a Sipp provider which would allow such an investment.

Mr Adams signed a declaration acknowledging that the investment he was entering into was high risk and that Carey was not providing investment advice.

He also confirmed he was not receiving any inducement to enter into the investment, though CLP had in fact promised him a £4,000 cash sum.

Carey Pensions had received a substantial number of business referrals from CLP. It did not pay CLP for the introductions, but did have an agreement in place to govern their business relationship.

Carey had carried out some investigations to satisfy itself that the store pod leases were genuine investments which could be held within a Sipp. 

In 2011, Carey had been visited by the FSA (the FCA's predecessor) which was satisfied with Carey's processes for dealing with introducers.

After being made aware that members were being offered cash to invest in the store pods, Carey terminated its agreement with CLP. 

However, by that point, arrangements in respect of Mr Adams' investment in the store pods leases were already at an advanced stage and the investment went ahead.

It subsequently became apparent that the value of the store pod leases was much less than the amount Mr Adams' pension fund had paid for them. In the subsequent court proceedings, an expert valuer estimated their value at just £15,000.

The claim against Carey

Mr Adams brought proceedings against Carey alleging, among other things, that  it had breached the FCA rulebook which requires FCA-regulated businesses such as Sipp providers to act honestly, fairly and professionally in accordance with the best interests of their client. 

Mr Adams claimed Carey had failed to put in place systems to prevent unsuitable investments facilitated by unsuitable introducers.

Was Carey at fault for accepting "execution only" business?

Mr Adams criticised Carey's execution-only model but the court held he was the author of his own misfortune.

Mr Adams had admitted in cross-examination that he knew the investment was high risk and he would still have made the investment even if he had obtained financial advice, as he was motivated by the £4,000 payment offered by CLP.