The Financial Conduct Authority (FCA) is set to attend a High Court hearing being brought against Sipp provider Carey Pensions next month, New Model Adviser® has learned.
In March a lead case from one individual will be brought against Carey Pensions by solicitors Wixted & Co over due diligence on unregulated investments the firm accepted. The case, which will be heard at the High Court in London, will be based on the involvement of unregulated introducers.
New Model Adviser® understands the FCA will also be present at the High Court in London. The FCA may make representations to the court if there is a question about its regulations. It will not be appearing as part of either the investors' case or Carey Pensions' case.
Carey Pensions has recently written to some members saying their Sipps are being moved to a ‘distressed’ book of business which would include ‘members with illiquid non-standard assets', New Model Adviser® revealed last week.
The solicitor firm bringing the case against Carey Pensions, Wixted & Co, is also bringing a similar case against Sipp provider Berkeley Burke with 77 investors forming a group claim against that Sipp.
The solicitors have around 90 cases sitting behind the lead case against Carey Pensions which is led by one individual, Wixted & Co’s associate solicitor Timothy Hampson said.
‘The outcome of this one [the test case] will have a big effect on the other cases,’ he added.
Chris Jones, the principal at Sipp consultancy business Rock Consultancy, said he has not heard of the FCA attending a court case against a Sipp firm before.
‘I would think it is significant and I guess they would be guiding the court on what the rules were when the investments were made,’ he said.
‘Sipps have been regulated since January 2007 and the FCA’s first Sipp thematic review in 2009 made clear that operators are responsible for the quality of the business they administer.
'In particular, in relation to advice from a third party such as an IFA, the FCA said that Sipp operators cannot absolve themselves of responsibility, but must have processes in place to identify possible instances of consumer detriment, such as unsuitable Sipps.’
The FCA declined to comment. Carey Pensions said it is unable to comment on the court case.