SIPP provider Berkeley Burke has lost the high court judicial review case it brought against the Financial Ombudsman Service (FOS).
This dispute relates to a 2014 FOS decision which ruled against Berkeley Burke for failure to carry out adequate due diligence in respect of its client’s investment in Sustainable AgroEnergy PLC, through their SIPP.
Sustainable AgroEnergy PLC – a biofuel scheme based in Cambodia – was investigated by the Serious Fraud Office and subsequently went into receivership following their intervention.
Whilst Berkeley Burke did not give investment advice to their client and therefore are not responsible for the suitability of this investment, the FOS initially upheld the client’s complaint on the basis that a SIPP providers obligation to check an overseas investment is simply an extension of existing due diligence requirements.
Something Justice Jacobs, the judge in this appeal case, also agreed with, having ruled the FOS acted within the existing rules and was not in error of the law. It’s expected Berkeley Burke will appeal the decision.
Even though this ruling is limited to this case, it’s thought that the ruling could have wide spread implications for other SIPP providers and may offer the possibility for people to make claims where previously there was little hope – such as when there was no adviser, but an unregulated introducer, involved in the transfer.
This verdict also prompted the FCA Chief Executive Andrew Bailey to write to other SIPP provider firms advising;
“If the outcome of any of these cases calls into question your firm’s ability both now and in the future to meet its financial commitments as they fall due, you must notify the FCA immediately. Where relevant, firms should also notify claims to their professional indemnity insurers in accordance with their policies.”
It’s been reported the FOS currently has 270 claims against Berkeley Burke, which were put on hold pending the outcome of this case.
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