Court grants appeal against Carey Pensions in landmark SIPP case

Carey Pensions compensates client after due diligence failure

The Court of Appeal has allowed Russell Adams to appeal the high profile High Court decision against Carey Pensions.

Carey Pensions and Russell Adams have been locked in battle for over two years, and the dispute does not seem to be ending any time soon. The Court of Appeal has allowed Adams to appeal a decision handed down in May, on the basis that Mr Adams has a “real prospect of success”.

Lord Justice Arnold stated that he found the importance of the issues raised by Adams, and the delay of two years in producing the first judgment, amounted to convincing reasons for the granting of permission.

The Court of Appeal is now expected to hear the case in early 2021.

 

Who are Carey Pensions?

Since 2009, Carey Pensions offered Self-Invested Personal Pensions (SIPPs) to many unsuitable individuals. The firm mishandled much of their clients’ money and failed to carry out the due diligence on a number of cases. They were ordered to compensate a former client for failing to carry out adequate due diligence of June this year.

The pension firm worked with unregulated introducers who would cold call people and convince them to invest in a Carer Pensions SIPP. They often offered a free pension review, which is a known sales technique used by scammers.

The unregulated introducers would persuade unsuspecting investors to invest into a variety of products through the Carey Pensions SIPP. One notable investment was the included Store First storage pods, from which clients were told they would make a guaranteed return of investment. Many investors lost all of their investment.

Carey Pensions also hit the headlines in 2017 after a BBC investigation found that at least a dozen investors had received “long and threatening” letters from the firm.

In October 2018, Carey Pensions was bought by STM Group for £400,000. Earlier this year, in February, Carey Pensions relaunched under a new name, Options.

 

What is the Carey Pensions Case?

In March 2018, a former client of Carey Pensions, Mr Russell Adams, took Carey Pensions to court. His case centred around the transfer of his existing FriendsLife personal pension into a Carey SIPP – £56,000 in total.

Almost all of the £56,000 was used to purchase storage pod leases from Store First. Mr Carey was introduced to the investment opportunity and to Carey Pensions by unregulated Spanish-based introducer called CLP Brokers Sociedad Limitada (CLP).

Adams’ lawyers accused the SIPP provider of facilitating investments into Store First which were unsuitable and are now deemed “worthless”. They were looking for compensation to get Mr Adams back to where he would be if had not have invested.

A judgement in May 2020 found in favour of Carey Pensions, however. The High Court agreed with Carey Pensions’ assessment that the loss of money was caused by the high-risk investment, not the pension transfer or any collusion between Carey and CLP.

 

Why is there an appeal?

Russell Adams lawyers argued after the case that the original judgement approached the case from “all the wrong angles”, in which the court placed too much emphasis on paper trails. They argued that the court did not properly consider the statutory framework that has been put in place to protect consumer such as Adams.

Agreeing with Adams’ lawyers, Lord Justice Arnold found that there were critical issues raised in the grounds of appeal. The Court of Appeal will now reconsider the scope of duties by SIPP operators purporting to act on an executive-only basis.

Gerard McMeel QC, Adams’ lead advocate stated:

Adams’ claim was approached by the parties as a test case on the responsibilities of SIPP providers, who are responsible for looking after the pensions of many self-employed people. The FCA as conduct of business regulator very properly intervened.

The inordinate delay in producing the first instance judgment, together with the manifest issues with its reasoning, came a disappointment to any fair-minded observer of this branch of the financial services industry.

The Court of Appeal now has the opportunity of determining what professional standards are required of those entrusted with pension assets, and what are the consequences for those Sipp providers who took the risk of dealing with unauthorised intermediaries. This is an important case for the courts’ traditional role in standard setting for professionals in the financial services sector and beyond.

The case is expected to be heard early next year due to historic delays.

 

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.

You can contact our experienced team by calling 0800 046 9976 or by emailing sb@smooth-commercial-law.co.uk.

 

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.