Self-invested personal pension (SIPP) administrator Carey Pensions has been accused of being "in bed" with scammers during an ongoing trial brought against the firm by a customer.
Lorry driver Russell Adams has alleged SIPP administrator Carey Pensions mis-sold him a SIPP. He and his lawyers have accused Carey Pensions of using a Spain-based unregulated introducer to facilitate investments in Store First unit pods.
Speaking at the High Court in central London on Thursday, Adams' legal representatives accused the SIPP administrator of being "in bed" with pension scammers.
They said the unregulated introducer possessed the hallmarks of a scammer, including asking for upfront payments and encouraging individuals to liberate their pensions into riskier investments, adding the situation was a "classic abuse of UK financial and tax law".
Carey Pensions legal team said there was "no evidence at all" the investment was a scam. Referring to a £4,000 inducement they said was claimed by Adams, they added: "If it was a scam, the claimant was a willing participant."
‘Claimants' fault - not Careys'
In July 2012, Adams invested £50,000 into Store First unit pods. Over the years, the funds have depleted and are now virtually worthless.
Adams' legal representatives argued the pension administrator breached Financial Conduct Authority COBS rules that dictate a firm must act in a client's best interest. They claimed that, if the firm had been doing so, it would have declined to give business to this sort of "high-risk and highly speculative investment".
They also argued that, if Adams had received "competent financial advice", it was unlikely he would have been put into a SIPP in the first place.
Carey's defence team argued the pension administrator was "blameless" for the loss, however, but the client was not.
The court heard Carey Pensions had warned Adams the investment was high-risk and highly speculative, but Adams chose to go ahead anyway to claim a £4,000 inducement from the introducer, which Carey Pensions chief executive Christine Hallett said the firm reported to HM Revenue & Customs.
Carey's lawyers added that SIPP providers were under no obligation to ascertain to what extent an investment is high-risk and reject that investment.
The case may prove especially significant as commentators have suggested it could shape the handling of future SIPP mis-selling claims if the judge decides to rule against Carey Pensions.
Speaking at Dentons Pensions' annual event yesterday, director of technical Martin Tilley said, in such a circumstance, the outcome of the case could have a "profound" impact on the marketplace and could result in "organised wind-ups" and "significantly fewer SIPP providers in the marketplace".
He later told Professional Adviser it would result in "the survival of the least toxic book".
The court case continues.
Considering paid alternatives
Our video series continues
All-day event on 24 April
£31m spent in 2017
Trailing fees fall to less than £1bn for the first time