Earlier this year we published in our Business Law Reports series a report of the judgment of the Administrative Court in R (Berkeley Burke SIPP Administration Ltd) v Financial Ombudsman Service Ltd  EWHC 2878 (Admin);  Bus LR 437.
This case has generated much interest among providers of self-invested personal pensions (SIPPs) and their customers given the support it provides for individuals having suffered losses following investments into scam schemes to bring claims against their SIPP provider, even if their provider was expressly acting on an execution-only basis and had not breached any rule in the Financial Conduct Authority (FCA) Handbook.
An appeal due to be heard this month was therefore highly awaited. However, as The Sunday Times reported last weekend, following the administration of Berkeley Burke (BB) last month, the appeal hearing has been vacated.
For the moment, therefore, the Administrative Court judgment is the last word on the matter.
In brief, in that judgment Mr Justice Jacobs dismissed a claim for judicial review brought by BB of a decision of the Financial Ombudsman Service. The ombudsman had ordered BB to reimburse its customer for sums lost as a result of him having transferred his existing personal pension to BB and having chosen to invest his funds in a scheme which subsequently turned out to be a scam. BB was held liable despite its customer having signed documents confirming that he accepted that the investment was speculative and high risk and that, in accepting the investment, BB was acting on an execution-only basis. The ombudsman decided that whilst BB had not been obliged to give advice and therefore had not needed to assess the suitability of the investment, it should have carried out due diligence to ascertain whether the investment was acceptable for a SIPP. The judge upheld that decision, holding that the ombudsman had been entitled to impose a duty on BB to investigate the scheme in reliance on PRIN 2.1.1R(2)(6) from the Principles for Businesses section of the FCA Handbook, which requires regulated firms to conduct their business with due skill, care and diligence and to pay due regard to their customers’ interests and treat them fairly. He dismissed BB’s argument that such a duty would conflict with the duty imposed on it by COBS 11.2.19R from the Conduct of Business Sourcebook in the FCA Handbook to execute the customer’s specific instructions to invest in the scheme.
To read our full headnote in this case, and for reports of similar cases, refer to our Business Law Reports series. This series, which is online only, provides specialist coverage of company, commercial and intellectual property law cases from the senior UK and European courts.