Sipp provider, Carey Pensions, has lost a due diligence case at the Financial Ombudsman Service.
Carey Pensions did not carry out adequate due diligence before accepting a self-invested personal pension (Sipp) application from an unregulated introducer, the financial ombudsman has concluded. The Sipp firm must now compensate their client, repaying any money he has lost as a result of the advice.
The ombudsman concluded that Carey, which is now known as Options Pensions, should have refused to give the client a Sipp as he intended to invest it in a high-risk, unregulated investment. Carey Pensions is, therefore, liable for the losses he has suffered.
The FOS Case
The client, known as Mr T, made a complaint against Carey Pensions in regards to his transfer to a Sipp and the investment made following the transfer.
Mr T’s problems started when he was contacted by an unregulated business based in Spain, called Commercial Land and Property Brokers (CL&P). Mr T was told by CL&P that he could a better return on his pensions if he transferred to a Sipp and invested in Store First.
Mr T signed a letter of authority to give Carey permission to deal directly with CL&P in relation to his pension transfer in September 2011. He signed an application form for a Carey Sipp at the same time.
Mr T argued that Carey had acted “negligently and in breach of its duties” by accepting his application from CL&P, as they were unauthorised and promoting unregulated investments.
Speaking of the case, ombudsman John Pattinson stated:
I do not consider that Carey acted with due skill, care and diligence, organised and controlled its affairs responsibly, or treated Mr T fairly or acted in his best interests by accepting Mr T’s business from CL&P.
To my mind, Carey did not meet its regulatory obligations, and allowed Mr T to be put at significant risk of detriment as a result.
It failed to treat Mr T fairly or act with due skill, care and diligence or take reasonable care to organise and control its affairs responsibly by doing so. And, in the circumstances, it is fair and reasonable for Carey to be held responsible for its failings.
Mr Pattinson ordered Carey Pensions to return Mr T to the financial position he would be in if it were not for Carey’s failure to carry out adequate due diligence checks. They must also pay Mr T £500 for the trouble and upset caused.
How can Smooth Law Commercial help?
We are acting for a number of clients who were advised by both regulated and unregulated advisors to transfer money out of their traditional pension into a Sipp, and to then invest significant sums of money into high-risk investments.
For most, these investments are completely unsuitable are only appropriate for high net worth individuals or sophisticated investors.
At Smooth Commercial Law, our team of experts have extensive experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice. We are seeing an increase in claims surrounding Sipp providers like Carey Pensions, and have managed to secure compensation for many of our clients.
Should you have a claim, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.