The legal dispute of Adams vs Carey has been resolved “wholly in favour of Carey Pensions UK”, with claims against the firm “dismissed on all grounds”, the rebranded Sipp provider confirmed on Monday.
Carey Pensions was sold to STM Group in October 2018 and is now called Options Sipp UK.
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The proceedings centred on a client called Mr Adams who was introduced to Carey Pensions by an unregulated introducer.
He transferred an existing pension fund into a self-invested personal pension administered by Carey and, in 2012, instructed his Sipp to purchase a number of rental units from a company called Store First.
Carey, as a non-advisory pensions administrator, carried out the transaction on an execution-only basis.
The investment scheme came under scrutiny in 2017, with the UK’s Serious Fraud Office working with the Spanish authorities to investigate it.
Store First and three associated companies were wound up in the UK high court in April 2017.
Adams subsequently brought a claim against Carey seeking damages.
The case was heard in court in March 2018.
Clear cut
Adams’ case focused on three key areas:
- That Carey had failed to act fairly, honestly and in accordance with the best interests of its clients;
- That, under FSMA section 27, the firm was responsible for any advice (known or otherwise) given by the introducer and that the introducer ‘arranged’ the underlying investments; and,
- That Carey was in a joint venture with the introducer and was therefore jointly liable for its actions.
The judge disagreed and found in favour of Carey on all three points.
A long time coming
Christine Hallett, managing director of Carey (now rebranded as Options “for your tomorrow”), said: “We acknowledge this isn’t the outcome the client was looking for, we do have sympathy for his situation and the fact that as a result of his decisions, the investments he chose and instructed us to invest in have lost value.
“That said, we are pleased that the judgment has now been delivered, and that the judge has found in our favour on all counts.
“It has been a long time coming and whilst we were confident of our position, the lengthy, comprehensive and detailed judgment recognises within it our approach to implementing strong contractual agreements and documentation, together with robust systems, controls and processes within the business.
“It was also clear that, as a Sipp provider, we are expected to carry out execution-only business based on decisions made by our clients.
“It is a judgment that has been long awaited by the Sipp industry and consumers alike, and gives clarity to what is expected of a Sipp provider under English law and the FCA Conduct of Business Principles when acting upon the instructions of a client.
“In addition, it has given a much better understanding of the legal relationship between an introducer and the service provider which will provide valuable guidance for both consumers and industry professionals.”
Solid legal footing
Alan Kentish, chief executive of STM Group, added: “The judgment is a very welcome and clear precedent for the whole of the UK financial services sector given the increased litigation and use of the Financial Ombudsman to determine complaints.
“This judgment gives a solid legal footing for these to now be considered in the context of this ruling.
“The potential implications for any financial institution carrying out execution-only business to have become responsible for their client’s decisions would be, in my opinion, wholly inequitable and inappropriate.
“I am sure many financial services providers and institutions, as well as their respective trade associations, would wholeheartedly agree and can now look to the future with greater confidence post this ruling.
“STM is keen to put this case behind it and ensure its UK business, Options for your tomorrow, realises its full potential.”
