A failed IFA facing millions of pounds in pension-switching claims has extended its administration pending the outcome of an appeal against the Carey Pensions case.
Wrexham-based Kingsway Wealth Management entered administration in 2019, embroiled in claims linked to work carried out by its appointed representative Pension Transfers Limited.
In October the Financial Services Compensation Scheme told FTAdviser it had already paid more than £1.7m to Kingsway clients for pension claims.
But an update published on Companies House this week revealed Kingsway had been granted an extended period of administration by the High Court in anticipation of the outcome of an appeal against the well-known Carey Pensions case.
Kingsway's administrators believe that if the Carey case is upheld, it will strengthen their case against mis-selling claims which the IFA firm faces.
In May last year Carey, now known as Options Pensions, won its case after a High Court judge ruled the provider, which was explicitly acting on an execution-only basis, was not liable for a member’s choice to invest in a high-risk investment.
But the case is now going to the Court of Appeal, with a hearing expected early this year.
Kingsway administrators said: "Our legal advice including that from senior counsel is that Kingsway's defences to creditor claims for mis-selling are aligned to those defences put forward and accepted in Carey Pensions.
"The company did not provide advice nor make investment recommendations or decisions on the way money was invested in the Sipp; the client's IFA and the client determined that.
"...we believe our duties as administrators in dealing with the purported claims from creditors relying on the decision in Carey Pensions being overturned cannot be completed until such time as this appeal is determined."
In November last year the High Court extended Kingsway's administration, pending the Carey appeal, to December 2021.
According to documents on Companies House, appointed representative Pension Transfers arranged for pension switches from defined contribution schemes in 2009 and 2012, which the clients then invested in a self-invested personal pension in investments which later collapsed.
In three separate cases prior to failing, the Financial Ombudsman Service had already ordered Kingsway to pay a total of £321,000 in relation to these pension switches.
This was despite the advice company arguing responsibility for the losses should also be shared between the clients, their IFAs and the Sipp provider.
In September last year the Court of Appeal granted client Russell Adams permission to appeal in the long-running case against Sipp provider Carey Pensions, on the grounds he had a "real prospect of success".
The case is expected to be heard early this year and is hoped to provide clarity to the industry on which part in the supply chain is liable for high-risk investments in Sipps.
Mr Adams alleged that Carey Pensions had mis-sold him a Sipp. He and his lawyers accused the Sipp provider of using a Spain-based unregulated introducer to facilitate investments in Store First unit pods which were unsuitable and are now deemed "worthless".