Judgment in favour of Carey Pensions in Adams v Carey case
18 May 2020
STM Group Plc (AIM:STM), the cross-border financial services provider, is pleased to announce the outcome of the judgment in the long-awaited Adams v Carey case, which has been found wholly in favour of Carey Pensions LLP ("Carey"), with Mr Adams' claims against Carey being dismissed on all grounds.
The judgment was handed down at 9.30 am this morning and relates to a claim by Mr Adams against Carey Pensions UK LLP for loss of value in an investment which was held within a Self-Invested Pension Plan (SIPP). The case was heard in March 2018.
The key elements of the case were as follows:
- Mr Adams was introduced to Carey by an unregulated introducer
- Mr Adams transferred an existing pension fund into a SIPP administered by Carey
- Mr Adams also instructed that his SIPP purchase a number of rental units from Store First
- Carey is a non-advisory pensions administrator and therefore carried out the transaction on an execution-only basis as instructed
- Mr Adams' investment in Store First did not perform as he had expected, which resulted in Mr Adams bringing a claim against Carey seeking damages
A concise summary of the judgment can be found at https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Financial-services-and-dispute-investigation/Clarity_for_SIPP_providers, who acted as the lawyers for Carey.
Alan Kentish, Chief Executive of STM Group Plc, commented:
"The judgment is a very welcome and clear precedent for the whole of the UK financial services sector given the increased litigation and use of the Financial Ombudsman to determine complaints. This judgment gives a solid legal footing for these to now be considered in the context of this ruling.
"The STM Board considers that potential implications for any financial institution carrying out execution-only business to have become wholly responsible for their client's decisions would be inequitable and inappropriate. I am sure many financial service providers and institutions, as well as their respective trade associations, would wholeheartedly agree and can now look to the future with greater confidence post this ruling.
"STM is keen to put this case behind it and ensure its UK business, 'Options, for your tomorrow', realises its full potential."
Christine Hallett, Managing Director of Carey (now rebranded as 'Options, for your tomorrow'), added:
"We are pleased that the judgment has now been delivered, and that the judge has found in our favour on all counts.
"It has been a long time coming and whilst we were confident of our position, the lengthy, comprehensive and detailed judgment recognises within it our approach to implementing strong contractual agreements and documentation, together with robust systems, controls and processes within the business. It was also clear that as a SIPP provider we are expected to carry out execution-only business based on decisions made by our clients.
"It is a judgment that has been long awaited by the SIPP industry and consumers alike, and gives clarity to what is expected of a SIPP provider under English law and the FCA Conduct of Business Principles when acting upon the instructions of a client. In addition, it has given a much better understanding of the legal relationship between an introducer and the service provider which will provide valuable guidance for both consumers and industry professionals.
"We now look forward to turning our minds to growing our UK businesses and maintaining our service levels for our clients."
Details of the court decision:
The claim was based on three different principles; 1) that under the FCA's Conduct of Business (COBS) 2.1.1 that Carey had failed to act fairly, honestly and in accordance with the best interests of its client; 2) that under FSMA section 27 Carey was responsible for any advice (known or otherwise) given by the introducer and that the introducer 'arranged' the underlying investment; and, 3) that Carey was in a joint venture with the introducer and was thus liable as joint tortfeasor for its actions.
In all three claims, the judge found in favour of Carey.
In the context of COBS 2.1.1R, the judge found that all of the contractual documentation between Carey and Mr Adams was clear that Carey was acting on an execution only basis; that it was not advising Mr Adams; that the investment in Store First was high risk and/or speculative; and that Mr Adams was responsible for his own investment decisions. In that context, the judge concluded that COBS 2.1.1R could not be read as imposing on Carey a duty to advise or comment on the suitability of the SIPP or investment, as that would be unlawful (noting that Carey does not hold the relevant permissions to advise); or to reject a 'high risk' investment. The court found that Mr Adams had to take responsibility for his investment decision.
In addition, under Claim 2 the judge found that the actions of the introducer fell far short of 'arranging' the investment, and that, crucially, the point at which the issue must be considered is when Mr Adams gave his instruction to invest. Prior to that point, Mr Adams was not bound to continue, nor had he suffered any loss. Also, the judge found that, on the evidence, the introducer did not advise Mr Adams to enter into the SIPP.
On the final point, the judge concluded that facts were entirely inconsistent with any conclusion that Carey assisted in the commission of a tort by the introducer and that there was no common design.
For further information, please contact:
|STM Group Plc|
|Alan Kentish, Chief Executive Officer
Therese Neish, Chief Financial Officer
Tel: Via Walbrook
|Matt Goode / Simon Hicks - Corporate Finance
Tim Redfern / Richard Chambers - ECM
|Tel: +44 (0) 20 7220 0500|
|Tom Cooper / Paul Vann||Tel: +44 (0) 20 7933 8780|
|Mob: +44 (0) 797 122 1972|
Notes to editors:
STM is a multi-jurisdictional financial services group which is listed on the AIM Market of the London Stock Exchange. The Group specialises in the administration of client assets in relation to retirement, estate and succession planning and wealth structuring.
Today, the Group has operations in the UK, Gibraltar, Malta, Jersey and Spain. STM has developed a range of pension products for UK nationals and internationally domiciled clients and has two Gibraltar Life Assurance Companies which provide life insurance bonds - wrappers in which a variety of investments, including investment funds, can be held.
STM's growth strategy is focussed on both organic initiatives and strategic acquisitions.
Further information on STM Group can be found at www.stmgroupplc.com