The high court dismissed an application by Berkeley Burke SIPP Administration Ltd (“BBSAL”) for judicial review of a FOS decision. The Ombudsman upheld a complaint against BBSAL regarding the loss of capital in relation to a permitted investment held in the SIPP platform administered by BBSAL.
It was the Ombudsman view the BBSAL did not perform sufficient due diligence on the permitted investment and thereby contravened the Financial Conduct Authority (“FCA”) Principles of Business where:
- a firm must conduct its business with due skill, care and diligence (principle 2).
- a firm must pay due regard to the interests of its customers and treat them fairly (principle 6).
The court was not persuaded by arguments advanced by BBSAL that it did not advise the client nor did it have a duty to check the appropriateness of the investment – as per COBS 9 & 10. Conversely, BBSAL argued it had an obligation to execute the transaction on a best efforts basis – as per COBS 11.
BBSAL also advanced arguments that the decision between the FOS and Pension Ombudsman Scheme (“POS”) was not consistent – the POS in similar cases ruled against the consumer. However, the FOS argued that the regulatory frameworks were different for the FOS and POS and the Ombudsman had wider powers and was not restricted to matters of law – he was able to take into account regulator’s rules and guidance, codes of practice and good industry practice at the relevant time to arrive at a fair and reasonable determination of the complaint.
We think that this decision will have a significant impact on current SIPP operators. They will be required to perform better due diligence on permitted investments and make provisions for potential claims on existing investments where the consumer has suffered losses. The FCA has reminded SIPP operators that they had to pay due regard to the FCA Principles of Business in any orderly sale of any block of business where there is a risk of business failure due to potential consumer complaints.