The case addresses the question of provider responsibility when accepting investments into a SIPP.

In a judgement published today, the Court of Appeal unanimously overturned its previous ruling and found that Adams was advised by CLP Brokers, an unregulated introducer based in Spain.

The court said that as CLP was not authorised by the Financial Conduct Authority to give investment advice, or make arrangements relating to investments, this was in contravention of the Financial Services and Markets Act 2000.

As the SIPP was entered into as a consequence of advice given by CLP, the High Court declared that the SIPP agreement is unenforceable against Adams and he is entitled to recover the money he paid into it as well as compensation to reflect the losses he has suffered as a consequence.

Christine Hallett, managing director of Carey, which has since rebranded as Options and bought by STM Group, said: “We are disappointed to have received this Judgment in relation to Section 27, and even more so that the various factors in Carey’s favour – the rigorous framework that Carey had put in place, and which was specifically highlighted by the judge at first instance, that Carey was not aware that the unregulated introducer was acting in breach of the general prohibition and terminated its relationship when it did become aware, and Mr Adams’ contribution to his own loss - were not sufficient for the Court of Appeal to exercise its discretion under Section 28.”

She added that further clarity in the case was both “welcome” and “needed” due to the implications of the ruling for the wider SIPP market.

She said: “Invariably all UK regulated businesses will need to consider their procedures and policies, and the potential implications of dealing with any unregulated third-party that could be deemed to be caught in what is under the judgment, the very broad and encompassing acts of 'making arrangements' and 'advising'."

Cross-border financial services firm STM, owner of Carey, has previously expressed disappointment at the Court’s decision to allow a challenge to the judgement after the case was won by Options (formerly Carey Pensions) in May. 

The High Court previously dismissed three claims from Mr Adams which have been seen to have major implications for the SIPP sector over who is responsible for investments.

Mr Adams brought the court case in 2018 by claiming that Carey was liable for losses on investments made in his SIPP even though Carey had not advised on the investments.

The case related to the liability Carey had for storage investments selected by Mr Adams.

Carey said Mr Adams was introduced by an unregulated introducer and transferred an existing pension fund into a SIPP administered by Carey. He then instructed that his SIPP be used to purchase a number of rental units from Store First.

Carey carried out the transaction on an execution-only basis as a pensions administrator.

However, Mr Adams’ investment in Store First did not perform as he had expected and he brought a claim against Carey seeking damages for his losses.