A ruling in the long-running Carey Pensions legal wrangle is due “imminently” which will bring much-needed clarity to the law concerning the use of unregulated introducers, a lawyer has said.
The prediction from APJ Solicitors lawyer Glyn Taylor said many of the claims relating to self-invested personal pension (SIPP) provider Carey had been effectively put on hold due to an appeal in the similar Berkeley Burke legal case.
Both cases deal with SIPP provider liability when client investments go wrong.
A ruling in the Carey case is now expected after Berkeley Burke’s administrators put a stop to the appeal.
Taylor said: “We expect there to be a ruling for the Adams vs Carey Pensions case imminently. We predict the outcome of the court ruling will find Carey Pensions did breach Section 27 of the Financial Service and Markets Act 2000 as it accepted a SIPP from an unregulated introducer.”
However, he added as a £4,000 inducement was accepted from the introducer, using legal argument under Section 28 of the Act, Carey could argue the investment would have proceeded without any guidance from an adviser.
The lawyer added: “The Carey Pensions ruling, when it does arrive, will provide more clarity into the law, particularly in relation to the Section 27 argument. The ruling in the case of Section 27 will mean that future SIPP cases who have used an unregulated introducer will be bound by the same arguments as seen in the Carey Pensions case.”
In February, Berkeley Burke SIPP Administration was granted permission to appeal a judgement delivered against it in October 2018. That ruling rejected Berkeley Burke’s claim against a Financial Ombudsman Service (FOS) decision.
In the original decision, the ombudsman ruled the SIPP administrator had to compensate a client after it failed to carry out appropriate due diligence on their investment.
Berkeley Burke, which facilitated the investment, argued it carried out the due diligence expected of it at the time, according to Conduct of Business Sourcebook (COBS) rules, and that the FOS subsequently placed undue responsibility by applying Financial Conduct Authority (FCA) Principles 2 and 6 in a way that created a new and unexpected duty of care on the part of SIPP operators.
Earlier this month, administrators RSM Restructuring Advisory decided not to go forward with the appeal.
The SIPP arm of Berkeley Burke was sold to provider Hartley SIPP.
Lorry driver Russell Adams alleged Carey Pensions mis-sold him a SIPP. He and his lawyers accused the SIPP firm of using a Spain-based unregulated introducer to facilitate investments in Store First unit pods.
Carey Pensions was bought out by STM in 2018.