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Making sense of the Carey Pension Judgement: What it means for your claim

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Reading all about the Carey v Adams judgement

What the Carey Pension’s Judgement means for your claim

This week the judge ruled in favour of Carey Pensions, in what is being penned a landmark case. The importance this case has on both consumer and the pension industry has brought on a big deal of attention, with many potentially feeling this could jeopardise other similar SIPP rulings.

For many within the industry, they had a joint view that Mr Adams was unlikely to win, as he was consistently adamant in evidence that he would have continued with the investment even if Carey had refused to do so. The key point of this case is not the decision, but the Courts view on how consumers are treated and its interpretation of COBS, (Conduct of Business).

However, this decision, though of high interest, does not contradict the Judgement in the Judicial Review case of Berkley Burke. More importantly, it also does not affect the recent FOS decisions in favour of APJ clients against Liberty SIPP. FOS decisions are determined on the complaint against the SIPP Operator by reference to the facts of the complaint and the opinion of the ombudsman as to what is fair and reasonable in all the circumstances of the complaint.

Let’s get technical
The Carey Judgement considered COBS 2.1.R; that a SIPP Operator has a duty to treat a customer fairly, act professionally and have due regard to the best interests of a client. HHJ Dight decided on the evidence provided that any breach of this could not be said to have caused Mr Adams loss, which was very fact specific.

The significant part of the Judgement for most of APJ client’s concerns is the references in the judgement relating to Section 27 of FSMA 2000.

The Court accepted that the establishment of the SIPP by Carey was a regulated activity. Mr Adams then argued that CL&P ‘advised’ (Art 53, RAO) on and ‘arranged’ (Art 25, RAO) for him the SIPP and/or the investment in Store First, which was a breach of the general prohibition.

The premise of s.27 FSMA 2000 is such that where an authorised person, in the course of a regulated activity, makes an agreement with another person, as a consequence of something said or done by a third party also in the course of a regulated activity, but in breach of the general prohibition, then that agreement may be unwound.

HHJ Dight found the actions of CL&P fell far short of ‘arranging’ the investment, and that, crucially, the point at which the issue must be considered is when Mr Adams gave his instruction to invest. Prior to that point, Mr Adams was not bound to continue, nor had he suffered any loss.

The difference is in the evidence
The main difference between this Judgement and the complaints against Liberty SIPP and Guinness Mahon concerns the activities of the introducer known as Avacade who promoted and arranged the investment into the high risk and illiquid SIPP. There is strong evidence that Avacade, recently prosecuted by the FCA, recommended Liberty SIPP whilst carrying out regulated activities as an unregulated firm.

There is also evidence that Liberty SIPP, once in receipt of the pension monies, wrote to the clients confirming they will contact Avacade to confirm the investment choices within the SIPP rather than asking the investor directly. This clear evidence demonstrated that Avacade brought about the investment within Article 26 and a had a positive or effective cause to the investment.

In respect of Guinness Mahon, they accepted business from Avacade after October 2013, when the FCA gave formal guidance on due diligence and therefore it is expected there would also be a finding that Guinness Mahon failed to follow good industry practice, which was not a finding in the Carey Judgement.

What this means for you
At APJ, we are beyond confident that FOS will continue to find against SIPP Operators where there has been a failure to carry out appropriate due diligence on an investment or where a SIPP operator has accepted volume business from referrers involved in the arrangement/ recommendation of the SIPP and promoted the high risk investment that has caused the loss to unsophisticated, vulnerable consumers. So don’t let the Carey Pension judgement stop you from getting in touch and seeing if you are eligible for a claim.

APJ operate on a No Win, No Fee basis and our first chat is always free where you are under no obligation to work with us after the call.

If you believe you need our help or just want to make a general enquiry to see if this is the right path for you, Get in touch with us today for a consultation or text CLAIM to 60650. We are here to support you.