The Financial Ombudsman Service (FOS) has defended its approach to SIPP complaints following the long-awaited Carey Pensions ruling.
On Monday (18 May), Carey Pensions – now named Options Pensions – won its legal battle against former client Russell Adams, with Adams’ claims dismissed on all grounds.
During the 2018 trial, Adams’ representatives argued Carey had breached Financial Conduct Authority COBS rules that dictate a firm must act in a client’s best interest by allowing Adams to use Carey’s SIPP to invest in a risky, unregulated Store Pods scheme. Carey, however, argued SIPP providers were under no obligation to reject the investment.
The ruling had been keenly awaited by the self-invested personal pensions (SIPP) industry as it has been expected to give clarity on the duty and obligations of SIPP providers. However, Adams still has the option to try and appeal the decision.
The FOS has occasionally faced criticism from the industry for its handling of SIPP claims. Fellow SIPP provider Berkeley Burke was granted permission to appeal a High Court judgment delivered against it in October 2018, which rejected the firm’s initial claim against an ombudsman’s decision that ruled it had to compensate a client after the provider failed to carry out appropriate due diligence on their investment.
Following the win for Carey Pensions, the FOS told Professional Adviser: “The High Court has already upheld our approach to SIPP complaints in the Berkeley Burke case. We will consider the judgment in the Carey case and continue to take relevant law, including case law, into account when resolving complaints. If customers are unhappy with how their financial provider has handled their complaints, they should come to us and we’ll see if we can help.”
Supporters of the SIPP industry, however, could argue Berkeley Burke never got its final day in court, as the firm’s administrators blocked its Court of Appeal hearing.
What happens now?
Some industry commentators suggested the Carey Pensions ruling could call some past FOS decisions into question.
In recent years SIPP-related cases have been ample at the FOS. Last year the FOS reported SIPP complaints had jumped more than a third in the second half of 2018.
That said, PA understands the FOS will not be revisiting closed SIPP cases as the decisions were made based on law at the time, and it does not re-evaluate cases as law develops.
This article has been updated to clarify Adams still has the option to try and appeal the Court’s decision.