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Judge rules in favour of Carey Pensions on high risk SIPP investment

19 May 2020

Carey Pensions has won a landmark ruling in the High Court regarding the investment of a £50,000 pension into a high risk investment.

Carey was taken to court by Russell Adams, who transferred a £50,000 pension into a SIPP administered by Carey, a non-advisory pensions administrator, via an unregulated introducer. Adams signed an execution-only contract when he invested into a storage pods firm. Carey said that it had warned Adams about the risks involved but he had instructed the firm to go ahead.

Adams argued that treating customers fairly meant he should not have been allowed to go ahead without advice and Carey hadn’t acted in the best interests of the client. His lawyers also argued that Carey was in a joint venture with and so responsible for any advice given by the introducer.

This week’s ruling dismissed Adams claims on all grounds.

The case was heard in March 2018 and the judgement has been long awaited by the industry, because of the implications for pensions firms allowing execution-only transactions and investment into high-risk investments.

Speaking after the judgement, Carey managing director Christine Hallet 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 while 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.”

Since the court case Carey Pensions has been bought by STM Group and changed its name to Options SIPP UK LLP.

Stephen McPhillips, technical sales director, Dentons Pension Management said: “We are pleased that the much anticipated High Court judgment in the case of Adams v Carey Pensions has now been handed down. Whilst it obviously relates to the very specific circumstances of the Adams v Carey Pensions case, it contains very important conclusions in relation to what is required, and what can be reasonably expected, of SIPP operators; particularly in the case of direct, non-advised clients.

“We are pleased to note that it fully recognises the underlying nature of self invested personal pensions (SIPPs), wherein investment decisions are made by the SIPP member.

“We are pleased also that it recognises that the SIPP member must go into any investment he/she wishes to make with eyes open to risk. In this respect, it provides clarity to consumers as well as SIPP operators.

“Finally, although the judgment was not centred around the extent of due diligence required by/expected of SIPP operators, it does contain very helpful observations on this topic and these in turn should be beneficial to the industry and consumers.”

“We will continue to monitor events surrounding the judgment. Including any subsequent appeals.”

Lawyers for Adams have indicated they will be appealing the decision.

Professional Paraplanner