News | September 23, 2021

PART 6 – FCA on a winning streak in Avacade case

The FCA has won against Avacade again – this time in the Court of Appeal. It follows the FCA’s earlier success in the High Court that ordered illegal pension introducers Avacade, Alexandra Associates (“AA”) and their directors to pay around £11m to consumers.


Avacade and AA advised around 2,000 consumers to transfer about £90m of their pension funds into SIPPs which they also promoted through their websites, promotional material and in telephone calls with consumers. Once consumers had transferred into those SIPPs, they were then given further advice on what to invest their pension pots in, including alternative investments such as:

  • ‘Hotpods’ – rented office spaces;
  • Sustainable AgroEnergy – green oil from crops in Thailand, Cambodia and the Philippines;
  • Ethical Forestry – melina trees in Costa Rica; and
  • Global Plantations – teak trees in Malaysia and Sri Lanka.

Avacade and AA earned almost £11m in commissions from these investments. Since then, many of the underlying investments have either failed or are in liquidation.

The High Court held that Avacade, AA and their directors had arranged, advised and promoted investments without FCA authorisation. It also held that they had made false and misleading statements to induce investors to transfer their pensions into SIPPs and then into alternative investments.

Adams v Options SIPP

Readers will recall our previous article on Adams v Options SIPP in May 2021’s edition of Pensions Compass which can be found here. Adams was another example of where introducers were held to have unlawfully engaged in the regulated activities of arranging and advising on investments.

Readers will recall that, in Adams, the case concerned how the legislation was designed to throw the risks associated with accepting introductions from unregulated sources onto regulated SIPP providers, in that case, Options SIPP (formerly Carey Pensions). The Court found against Options SIPP that it should have done more to cease investments with all its clients who had been introduced by the unregulated introducer, CLP Brokers.

The Court of Appeal Judgment

Avacade and AA were granted four grounds to challenge the High Court decision – three on the findings of the Trial Judge on the application of article 25(2) (arranging deals in investments) and one on the construction of article 33(c) (the introduction exception). The appellants also sought new grounds of appeal in light of the Adams judgment as the case was published after the Avacade decision to grant permission to appeal, namely that:

  1. placing the alternative investments did not involve “regulated activity” (article 25(2));
  2. they were excluded from having to be authorised as they did not accept a financial reward (article 29); and
  3. the introduction exclusion applies (article 33).

The Court observed that it will only consider new grounds for appeal in “highly restricted circumstances“. It is, therefore, a high bar to succeed on new grounds of appeal, particularly, as in this case a) the points had been refused permission to appeal previously and b) Adams did not involve a change in the law. The judge flatly rejected the new grounds of appeal and it is clear from the judgment that, even if the bar was not set so high, the new grounds would have failed on merit.

In particular:

  1. if placing the alternative investments did not involve “regulated activity” this would be contrary to “both the Trial Judge’s findings and the reality of the schemes“;
  2. Avacade and AA did receive a financial reward in the form of commission from the alternative investments and other additional fees (as per the Trial Judge’s findings); and
  3. the judge failed to see how their interpretation of article 33 “would make any difference to the outcome on the facts of this case“.

Avacade and AA also lost on their second appeal in respect of the restitution orders made from the Remedies Judge. It was, therefore, a unanimous victory for the FCA and the consumers that the FCA ultimately represents.


Avacade and Adams are not just decisions against unscrupulous individuals. They provide a clear, strong and unambiguous statement by the judiciary in favour of consumer protection in respect of the regulation of SIPP introducers and providers.

Whilst it remains open for Avacade to appeal to the Supreme Court (Options SIPP has sought permission to appeal from the Supreme Court) it would be quite an achievement if Avacade was successful as there are now two decisive Court of Appeal judgments that fall on the side of consumer protection in this area of law. It’s fair to say that Avacade is facing an uphill battle!

What can employers and providers of SIPPs do to protect themselves?

Employers that facilitate access for their employees to a SIPP and SIPP providers can help protect themselves by carrying out robust due diligence on the introducers that they deal with. Care should be taken in delegating regulated activities to other firms to ensure that firms have the required permissions, even when those firms are authorised by the FCA.

What about consumers?

With environmental, social and governance policies becoming ever more at the forefront of investment decision making, there are more varieties of investments to choose from than ever before. Consumers should take independent financial advice and make use of free resources such as the Money and Pensions Service (“MaPS”) and the FCA’s websites before making any investment decisions. And remember, if it sounds too good to be true, then it probably is!

Further Information

For the MaPS website click here. For the FCA website click here.

The FCA’s handbook provides further guidance on introducing and the relevant articles of the Regulated Activities Order which were the subject matter of the Avacade case. The relevant guidance can be found here.

For further commentary on the cases, please see our comments provided for Law360 here and here.