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What does the Supreme Court ruling mean for investors?
The case has huge implications for the financial services industry, as it places increased emphasis on the actions of firms at different stages along a client’s investment journey. If an introducer firm or Independent Financial Adviser (IFA) passes new business to a SIPP provider, there is now an expectation that the SIPP firm would vet the proposed pension transfer and consider its suitability for the investor.
The case makes it clear that simply carrying out an introducer firm’s instructions, without undertaking such due diligence, is no longer acceptable.
Carey Pensions, now called Options and part of STM Group, has failed in its bid to overturn a previous landmark Court of Appeal ruling about “financial advice” and whether or not the Claimant, Russell Adams (and other investors in a similar position), could claim against them for compensation for loss of his pension by transferring into the SIPP.
The Supreme Court is the UK’s highest court and its refusal to allow the latest appeal finally ends a decade-long legal battle.
Adams v Carey – a brief history
The original Adams v Carey case was heard in 2018 and relates to a claim made by Russell Adams after investing, some years earlier in 2012, in Store First storage pods through a Self-Invested Personal Pension (SIPP). Mr Adams’ pension transfer was passed to Carey by CLP Brokers, an unregulated introducer firm. Store First investments were high risk and unregulated and the company was eventually wound up. Mr Russell lost a lot of money as a result.
Mr Adams’ case was heard at the High Court, where it was argued that his agreement with Carey was rendered unenforceable under section 27 of the Financial Services and Markets Act 2000. This was on the basis that his decision to move his pension, invest in storage pods and release some money from the pension fund had only been made as a result of his dealings with, and what he thought was financial advice from, CLP.
He also argued that Carey acted in breach of City watchdog, the Financial Conduct Authority’s (FCA’s) Conduct of Business Sourcebook COBS 2.1.1R. These strict industry rules required Carey to act “honestly, fairly and professionally in accordance with the best interests of its client”.
The claims were dismissed by the High Court but Mr Adams went on to appeal that decision successfully in the Court of Appeal in 2020. In a long and very technical judgement, the Law Lords upheld Mr Adams’ first complaint, but not the second.
The final chapter in the saga was Carey losing its appeal to the highest court, the Supreme Court.
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TLW Solicitors' view on the Carey ruling
“Compensation claims cost companies a lot of money and we have seen many go out of business as a result. It’s not surprising that the STM Group wanted to avoid such liabilities and was prepared to fight the case all the way to the Supreme Court. But this latest ruling confirms that the Court of Appeal got their decision right.
Investors should expect no less than to be looked after by the firms they deal with when making important and financially risky decisions like transferring lifetime savings. Each FCA regulated company has a duty of care to their customers.”
TLW can help
TLW Solicitors has helped many people who have been given unsuitable financial advice to transfer their pensions into SIPPs, including investors who, like Mr Adams, invested in Store First and storage pods. Similarly, we are working with many investors who have had claims successfully upheld on the basis of the Carey ‘due diligence’ ruling.
Working on a ‘no win – no fee’ basis, TLW’s experienced team can help you make a compensation claim. If you are concerned about your, a friend, or a loved one’s SIPP investment, please get in touch with TLW Solicitors today.
