Robin Selley

There have been many claims to hit the headlines in recent years for “financial mis-selling” but in the last week two articles caught our eye on perhaps the lesser known (or lesser spotted) variety of mis-selling in the financial industry.

There have been two significant cases in the pipeline relating to the ‘mis-selling’ of self-invested personal pensions (Sipps).

The first case concerns a longstanding dispute between Berkeley Burke Sipp Administration and the Financial Ombudsman Service (FOS). Back in 2014, the FOS ruled against Berkeley Burke for failing to carry out adequate due diligence on a £29,000 unregulated collective investment scheme after Wayne Charlton lost part of his pension to a fraudulent company, Sustainable AgroEnergy. That company purported to provide agricultural land leases in Cambodia, where they would grow jatropha trees for biofuel, but in 2012 Sustainable AgroEnergy was investigated by the Serious Fraud Office and went into administration.

The FOS said that Berkeley Burke had a duty to carry out “advisor-style” due diligence on his investments. Berkeley Burke challenged that decision initially asking the FOS to review their decision before asking the High Court to consider the case. In October 2017 the High Court dismissed Berkeley Burke’s challenge but they sought a Judicial Review of that decision, with the Judgment released today.

The judgment establishes with greater certainty whether Sipp providers have a duty of care to vet unregulated investments for their clients.

In finding for the Financial Ombudsman Service, Judge Jacobs says asking a Sipp provider to check an investment in a foreign country is simply an application of existing due diligence requirements.

Berkeley Burke have said they will appeal today’s decision.

Meanwhile, the FCA have issued an open letter to Sipp operators advising them to communicate “in an open and cooperative way”.

The next Sipps decision expected shortly is in the claim brought by lorry driver Russell Adams against Carey Pensions. Adams was paid an inducement of £4,000 into his savings account to encourage him to put money into rental scheme Store First. He subsequently transferred £50,000 into a StoreFirst investment on 12 June 2012. Adams claims that he was not told how risky the investment was.

Take a big Sipp…