SIPP provider faces claims over introducers work

Carey Pensions, a Self-Invested Personal Pension (SIPP) provider, is facing claims worth up to £3m in what could be a watershed moment for the way such claims are handled, as reported by FT Adviser. 

The firm is accused of working with unregulated introducers to facilitate investments in Store First storage pods, which have been described as “worthless”.

On 19th March, a client who invested with Carey Pensions is due to appear in the High Court for a four-day trial against the firm. This could be a landmark moment for litigation on the issue; as a test case for the approximately 90 clients with claims against the provider, and more widely as a precedent to other claims against SIPP providers. Berkley Burke, another such provider, is due to enter Court to answer similar allegations in the coming months.

Carey is accused of failing in several respects. Firstly, it is accused of breaching Section 27 of the Financial Service and Markets Act 2000 by establishing a SIPP after an unregulated third-party firm advised on the transfer for the sole purpose of investing in the storage pods. It also potentially breached the FCA COBS rules that dictate a firm must act in the client’s best interest, and additionally is accused of operating a joint enterprise with an unregulated introducer.

The alleged unregulated introducer is CLP brokers, a Spanish firm linked to Terence Wright, who was the subject of a warning from the regulator in 2010 for “providing financial services or products in the UK without our authorisation.”

Mark Smith, chief operating officer at Wixted & Co solicitors, the firm bringing the claim on behalf of the claimant, said the ruling could transform the way that SIPP claims are handled in future, due to their argument that a firm cannot exclude a client from any liability it may have under the regulatory system.

The case comes at an interesting point in the history of SIPPs. Up until January, claims which did not involve regulated advice were considered to be outside the remit of the Financial Ombudsman Service (FOS) or the Financial Services Compensation Service (FSCS). However, the FSCS has declared that it is accepting claims in relation to three SIPP firms for the first time. The Financial Conduct Authority (FCA) is also beginning to scrutinise firms operating at the fringes of regulated activity in more detail. There is a sense that the three regulatory bodies are finally coming to a consensus on this issue.

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