Failed IFA reviews pension claims in Carey wake

Failed IFA reviews pension claims in Carey wake

A failed IFA that is facing millions of pounds in pension switching claims is set to review its position in light of the outcome of the Carey Pensions case

Kingsway Wealth Management entered administration in December last year, embroiled in claims linked to work carried out by its appointed representative Pension Transfers Limited.

The Financial Services Compensation Scheme has already started paying out against the adviser, but in an update on Companies House the company's administrators have now said they would be "reviewing purported contingent liability claims" in the aftermath of the Carey ruling. 

Kingsway administrators said they were also considering challenging rulings against the company from the Financial Ombudsman Service, as a result of the Carey case bringing about "significant change" in how liability is determined in pension switch cases. 

In the long-running Carey v Adams case, the High Court found against the Sipp client bringing the claim, judging Carey Pensions should not compensate him for a high-risk, execution-only store pod investment held in its Sipp. 

It essentially adjudicated an execution-only service does not need to bear responsibility for the high-risk investments it allows investors to make within its Sipp range.

According to documents on Companies House, Kingsway's appointed representative - Pension Transfers Limited - arranged for pension switches from defined contribution schemes in 2009 and 2012.

Clients then invested via a self-invested personal pension in investments that later failed.

In three separate cases the Financial Ombudsman Service had already ordered Kingsway to pay a total of £327,000 in relation to these pension switches, despite the advice firm arguing responsibility for the losses should also be shared between the clients, their IFAs and the Sipp provider. 

The IFA was advised to set aside £2.6m to cover any potential pension switching claims against its appointed representative.

But according to administrators the Wrexham-based advice firm faced up to £3.1m worth of contingent claims relating to advice given to invest in Sipps - but these claims had not been ruled on by the ombudsman.  


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