Berkeley Burke v FOS decision due ‘in next few weeks’

Hannah Godfrey writes...

The concluding judgement in the ongoing Berkeley Burke versus the Financial Ombudsman Service (FOS) case is set to be given in the “next few weeks”, the hearing’s judge said on Friday morning.

Speaking on the third and final day of a judicial review hearing held in London this week, Justice Jacobs said he would come to a decision on the case within the next few weeks.

He also suggested the outcome of a looming judgement on another self-invested personal pension (SIPP) case could prove material to the case discussed this week.

The judge noted the judgement on the Adams v Carey Pensions case, which was heard in the High Court earlier this year, is due in days, and legal representatives could submit further evidence to him if they believed the outcome of the case could materially affect the outcome of Berkeley Burke v FOS.

The Adams v Carey case has some comparable features. Carey Pensions, a SIPP administrator, allowed a client to invest in an unregulated investment scheme via a SIPP.

The hearing so far

Berkeley Burke was fighting a 2014 FOS decision in which the ombudsman ruled the SIPP administrator had to compensate a client after it failed to carry out appropriate due diligence on his investment.

In 2011, Wayne Charlton decided to invest his £29,000 pension pot into an unregulated investment in Cambodia. The investment scheme, Sustainable Agro Energy, said it would enable investors to purchase land in Cambodia on which to grow jatropha trees that would later be used to create bio fuel. The scheme was later found to be fraudulent.

The three-day judicial hearing saw legal representatives from the SIPP administrator, the FOS, the Financial Conduct Authority and Wayne Charlton present their cases.

On the first day of the hearing, Berkeley Burke’s lawyers suggested the SIPP administrator would have needed a “crystal ball” to understand the obligations the FOS would place upon it when administering the case some three years after the investment was made.

Barrister Jonathan Kirk, who represented the firm, argued the ombudsman had considered tighter rules around due diligence requirements of SIPP providers that came into play in 2014, therefore applying retrospective legislation to a 2011 investment decision.

He also argued Berkeley Burke was not responsible for the due diligence the FOS came to expect of it, saying the firm merely executed the wishes of a client, as he stated it was obliged to do under the Conduct of Business Sourcebook (COBS) rule 11.2.

The following day the FOS accused the SIPP administrator of simply “ticking boxes“. Barrister James Strachan, who was representing the FOS, argued Berkeley Burke failed to carry out adequate due diligence because it did not consider the COBS rule in light of wider legislation and the principles that sit alongside the COBS rules – namely that the rules were written to enhance consumer protections.