STM Group, the parent company of the formerly known Carey Pensions (now Options Pensions), has set aside £3.6m for possible future claims against the company following the recent Court of Appeal ruling in Adams v Carey, see more on that decision here:
Mr Adam’s case
The case arose following Mr Adams transferring his personal pension with Friends Life into a self-invested personal pension (SIPP) administered by Carey in 2012 who then, on his instruction, used £52,500 of the pension fund to purchase leasehold self-storage units, owned and operated by Store First Limited (“Store Pods”).
Mr Adam’s evidence was that he has been persuaded to follow advice and guidance to transfer his pension and invest in Store Pods by CLP Brokers Socieded Limitada (‘CLP’) a firm that operated from premises in Spain.
The investment was not successful. The rental units did not generate any significant income and evidence presented at trial suggested that the units were worth a fraction of what had been paid for them.
Mr Adams brought a claim against Carey Pensions (now known as Options SIPP UK LLP) seeking to hold them liable for the loss to his pension fund within the SIPP.
It was Mr Adam’s case that he had agreed to transfer his pension to the Carey SIPP in consequence of things said and done by CLP, in contravention of what is known as the ‘general prohibition’ imposed by section 19 of the Financial Services and Markets Act 2000 (‘FSMA’).
Section 19 bars anyone but a person authorised by the Financial Conduct Authority (‘FCA’) from carrying on specified activities. Section 27 renders agreements entered in consequence of something said or done by a third party in contravention of the general prohibition unenforceable.
Mr Adams alleged that CLP had breached the general prohibition by carrying on activities specified in articles 25 and 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (“the RAO”). Articles 25 and 53 are respectively concerned, with “Arranging deals in investments” and “Advising on investments”.
Find out more about the case here: Landmark decision for Mr Adams Blog | Hugh James.
More possible claims
The company made the estimate based on a group of claims deemed to have similar characteristics to that of Adams’ claim. As at 8 April 2021, the Financial Ombudsman Service had 592 open complaints against Options UK Personal Pensions (formerly Carey Pensions), a number of which we represent here at Hugh James.
We had hoped that the Court of Appeal’s ruling would enable the Financial Ombudsman Service to issue final decisions in similar cases which it would seem have been on hold pending the outcome of the Adams case.
However, STM Group has now sought permission from the Supreme Court to appeal the Court of Appeal’s recent decision. STM Group have argued that the Court of Appeal “erred in law” in its application of particular sections of the Financial Services and Markets Act. The chairman of STM Group, Duncan Crocker, is reported to have said that the outcome of the case would have a wider affect on the financial services market as a whole and therefore the issues “warrant consideration from the highest court”.