Russell David Edward Adams v Options UK Personal Pensions LLP (formerly Options Sipp UK LLP and Carey Pensions UK LLP)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Newey,Lady Justice Rose,Lady Justice Andrews |
| Judgment Date | 01 April 2021 |
| Neutral Citation | [2021] EWCA Civ 474 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2020/1284 |
| Date | 01 April 2021 |
and
[2021] EWCA Civ 474
Lord Justice Newey
Lady Justice Rose
and
Lady Justice Andrews
Case No: A3/2020/1284
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
His Honour Judge Dight CBE (sitting as a Judge of the High Court)
[2020] EWHC 1229 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Gerard McMeel QC and Jay Jagasia (instructed by Wixted & Co) for the Appellant
Andrew Green QC and Fenner Moeran QC (instructed by Eversheds Sutherland (International) LLP) for the Respondent
Nicholas Vineall QC (instructed by The Financial Conduct Authority) for the Intervener
Hearing dates: 2–4 March 2021
Approved Judgment
This appeal arises out of the transfer by the claimant, Mr Russell Adams, of a pension fund into a “self-invested personal pension” (or “SIPP”) and the investment of the proceeds in “storepods”. The investment having proved very unsuccessful, Mr Adams sought relief under the Financial Services and Markets Act 2000 (“ FSMA”) against the operator of the SIPP. His Honour Judge Dight CBE, sitting as a Judge of the High Court, dismissed the claim, but Mr Adams appeals against that decision.
Basic facts
The defendant was incorporated in 2009. Until last year, when following a change of ownership its name was altered first to Options SIPP UK LLP and then to Options UK Personal Pensions LLP, the company was called Carey Pensions UK LLP and I shall refer to it as “Carey” in this judgment.
Carey has throughout carried on business as a SIPP provider and administrator. Christine Hallett, the company's chief executive officer, stressed that it acts on what she termed an “execution only” basis. She explained in a witness statement that the company “does not provide any advice and acts only on the express instructions of its members”.
Carey's pension scheme was constituted by a declaration of trust which Carey executed on 27 July 2009. The declaration of trust provided for the “establish[ment] under irrevocable trusts [of] a pension scheme to be known as the ‘Carey Pension Scheme’” to be governed by attached rules. Carey was appointed as the scheme administrator and Carey Pension Trustees UK Limited (“Carey Trustees”), an associated entity, as the scheme trustee.
The rules provided for Carey Trustees to hold the assets of the pension scheme at the disposal of Carey, which was to apply the fund upon the trusts contained in the rules to provide benefits in accordance with them. No member of the pension scheme was to have any claim, right or interest in respect of the fund except under the rules, but the parts of the fund which Carey determined to be attributable to particular members (“Individual Funds”) were to be applied in securing benefits in respect of those members and their dependants. As would be expected, there was provision for income withdrawal, lump sums and death benefits. Carey was given full powers of investment, but, in relation to an Individual Fund, was generally to exercise those powers only in accordance with any directions given by the relevant member or dependant. Carey could opt to transfer an Individual Fund, or an amount representing it, to another pension scheme or to buy out a member's benefits by arranging for them to be secured with an insurance company.
During the relevant period, Carey offered two “brands” of SIPP: a “Full SIPP” and a “Restricted Investment SIPP”. A wider range of investments was possible in a “Full SIPP”. Investments such as commercial land and property, unquoted shares, direct holdings of quoted shares, loans, borrowings, derivatives and hedge funds were not permitted in a “Restricted Investment SIPP”.
In 2011, Carey started to accept into SIPPs investments in “storepods”. The investments comprised long leases of units in a storage facility in Blackburn, Lancashire granted by a company called Store First Limited (“Store First”). Income was to be generated by the sub-letting of the units.
In all, Carey had some 580 clients who invested in the storepod scheme. The investments were made over a period of six months and averaged about £50,000 each. The total amount invested represented approximately 10% of the assets held with Carey and, as Mrs Hallett explained when giving oral evidence, storepods accounted for 20% of Carey's income in 2011 and nearly 30% of its income in 2012.
Most of the clients who invested in storepods were introduced to Carey by CLP Brokers Socieded Limitada (“CLP”), which operated from premises in Spain. Unlike Carey, CLP was never authorised by the Financial Conduct Authority or its predecessor, the Financial Services Authority (for both of which I shall use “FCA” in this judgment). Carey first accepted a referral from CLP in August 2011 and the Judge observed in paragraph 14 of his judgment:
“It is obvious from emails passing directly between CLP and [Carey] in early August 2011 that [Carey] knew that investors in the Store First scheme would be directed to [Carey] to invest their pension funds via a SIPP to be provided by [Carey] and it put in place a system for handling such investments, including the use of conveyancing solicitors to complete the acquisition of the underlying investments.”
Also in August 2011, Mrs Hallett sent CLP an email detailing what had been agreed in a conference call which included the following:
“Money Laundering, CH indicated needed Photographic and Address, CLP stated they would always endeavour to provide one photo and one address but where no photo id available would Carey accept two forms without photo. ANSWER YES
…
CLP to get clients to obtain Discharge forms from transferring schemes or to provide Carey with letter of authority addressed to Insurance Company to allow Ins. Com or transferring scheme to talk to Carey ACTION CLP to implement
Current Letter of Authority of client to allow Carey to talk to CLP about client scheme needs to be reworded to be wider [than] the pension transfer and suggest insert ‘all matters relating to my pension arrangements’ ACTION CLP to change and obtain emails from existing clients who have already provided letter of authority”
On 29 September 2011, CLP completed a “Non-Regulated Introducer Profile” form for Carey in which it confirmed that it typically received commission from the investment provider of between 2% and 5% of the amount invested. It also identified those running the company as Terence Wright and Lesley Wright. Although Carey was unaware of this until May 2012, the FCA had posted a warning notice in respect of Mr Wright in 2010. The notice warned that Mr Wright was not authorised under FSMA to carry on a regulated activity in the United Kingdom, explaining that it believed that he “may be targeting UK customers via the firm Cash In Your Pension”.
The relationship between Carey and CLP came to be governed by written “Terms of Business” which were not signed until 20 March 2012 but had effect from 15 August 2011 and the Judge found in paragraph 20 of his judgment that the Terms of Business “reflected the discussions between [Carey] and CLP and the basis of the relationship between them and their respective roles from August 2011 prior to it being signed”. The document, which was headed “Non-regulated Introducer Agreement”, explained that it:
“covers the relationship between The Business Introducer [i.e. CLP] and The SIPP Operator [i.e. Carey] whereby The Business Introducer may introduce clients to The SIPP Operator for the purposes of applying on an execution only basis and commencing a Carey SIPP”.
Carey “reserve[d] the right to decline any application and [was] not required to give any reason for refusing any such application”. CLP undertook:
i) That “they will not provide advice as defined by the Act [i.e. FSMA] in relation to the SIPP”, and that was stated for “the avoidance of doubt” to extend to “advice on the selection of The SIPP Operator, contributions, transfer of benefits, taking benefits and HMRC rules”;
ii) That it would inform Carey “[i]f for any reason [it] believes that any employee, representative or agent has provided advice in respect of the SIPP”;
iii) That it would “only introduce Clients to [Carey] in accordance with the procedures agreed between the parties”;
iv) That, prior to any application being submitted to Carey, it would issue to the client Carey's “Key Features Document”, “Fee Schedule”, “Terms and Conditions” and “Evidence that the client has received, read and understood these documents”;
v) That it would “not make promises or statements on behalf of [Carey] without [Carey's] prior written consent”; and
vi) That it would inform Carey “[i]f for any reason [CLP] conducts or believes they may be conducting activities subject to the Act”.
The claimant, Mr Adams, who was born on 17 December 1960, is a goods vehicle driver. In early 2012, he and his wife jointly owned their home, which was worth about £380,000 but subject to a mortgage of about £170,000, and he had a personal pension plan with Friends Life valued at some £52,000. In the previous year, however, HSBC had obtained judgment against Mr Adams on a loan and so he was looking for ways in which to meet this liability. As he explained in his witness statement, he “saw an ad saying ‘release some cash from your pension’ (or words to that effect)” and “was led to CLP website which claimed that [he] could do much better...
To continue reading
Request your trial
-
CJ and LK Perks Partnership v Natwest Markets Plc (formerly The Royal Bank of Scotland Plc)
...principles, and also in accordance with the understanding that, as stated by Newey LJ in Adams v Options UK Personal Pensions LLP [2021] EWCA Civ 474 at 115(i): “A key aim of FSMA is consumer protection. It proceeds on the basis that, while consumers can to an extent be expected to bear re......
-
The Financial Conduct Authority (A Company Ltd by Guarantee) v Avacade Ltd ((in Liquidation)) (trading as Avacade Investment Options)
...for which they do not have permission, on the basis that the decision of this court in Adams v Options UK Personal Pensions LLP [2021] EWCA Civ 474, delivered since the two judgments and the decision of Asplin LJ on permission to appeal, provides further reasons for challenging the conclus......
-
The King on the application of Options UK Personal Pensions LLP (formerly Options Sipp UK LLP and Carey Pensions UK LLP) v Financial Ombudsman Service Ltd
...is reported as Adams v Options SIPP [2020] EWHC 1229 and an appeal decision is reported as Adams v Options UK Personal Pensions LLP [2021] EWCA Civ 474. Mr Adams alleged that (1) under sections 27–28 of FSMA his agreement with Carey was unenforceable and he was entitled to recover money tr......
-
Baroness Jacqueline Van Zuylen v Rodney Whiston-Dew
...are very similar to those that were dealt with by the court in the recent case of Adams v Options UK Personal Pensions LLP [2021] EWCA Civ 474, where the Court of Appeal (at paragraph 75) approved a dictum by Henderson J that, in drawing the line between what amounted to providing informat......
-
English Court Of Appeal Confirms The Width Of The Consumer Contract Jurisdictional Gateway In Financial Services Claims
...claim was effectively a replay of the previous year's appellate decision inAdams v Options SIPP UK LLP (formerly Carey Pensions LLP) [2021] EWCA Civ 474; [2021] Bus LR 1568 ("Adams"), but with a different cross-border twist. In Adams the unregulated intermediary was offshore, apparently ope......