MEDLEY OF CASE LAW – TRUSTEES AND INTRODUCERS IN HOT WATER!
19 / 05 / 2021
A digest of some recent cases:
Members suing SIPP operator
In Adams v Options SIPP (formerly Carey Pensions), the Court of Appeal decided on 1 April 2021 the member’s agreement with the FCA regulated SIPP provider was unenforceable and could be unwound as it was made via an unauthorised introducer in Spain.
There was a clear steer from the Court of Appeal in this case in favour of consumer protection when it comes to enforcing agreements where an introducer was involved. The Court did not exercise its discretion to enforce an agreement, even though the SIPP provider was not aware of the introducer’s breach of consumer protection legislation (the Financial Services and Markets Act 2000).
Paul’s article on this interesting decision is included in this issue of Pensions Compass and was originally published in Law360 (see the full article for further details).
FCA proceedings against Introducers Avacade and Alexandra Associates (UK) Ltd and their directors
In FCA v Avacade & Others, the High Court decided on 30 June 2020 that the introducers were not mere conduits but had actively made arrangements with a view to the sale and purchase of SIPP investments and had actively advised on members transferring to SIPPs. The luckless customers were persuaded to transfer to SIPPs under which various unregulated investments were available, such as Costa Rican timber plantations.
The Court’s key views:
- contractual wording disclaiming responsibility was not relevant to whether the introducers were carrying out FCA regulated activities; and
- steering customers to a particular course of action by presenting options in a particular way could amount to advice.
The story continues – the introducers’ appeal against the June 2020 High Court decision is due to be heard by the Court of Appeal on 7 July 2021.
Member suing SIPP Trustee for (allegedly) allowing residential use of SIPP property
In Cunningham v Namulas Pension Trustees the Scottish Court of Session on 18 December 2020 dismissed the member’s claims.
The member argued the scheme trustee should not have declined to transfer his funds out of the SIPP (the SIPP Trustee so decided as it considered the question of whether a tax charge had arisen should be settled and any tax due paid should be dealt with first before any transfer of funds out of the SIPP).
The member also complained that the Trustee had no knowledge of the conversion of the scheme property from commercial to residential use (which often triggers a tax charge).
The Deputy Pensions Ombudsman disagreed with the member’s claims, saying the Trustee had acted properly. The Deputy Pensions Ombudsman also refused the member’s request to stop the Pensions Ombudsman proceedings, as the member wished to sue Namulas for negligence in separate Court proceedings.
Whilst the Trustee’s approach was upheld, the general principle remains that trustees should keep well informed and not, through combined delegation and lack of due reporting, exist in a state of ignorance.