Court of Appeal dismisses JR application over SIPP challenge

The Court of Appeal has dismissed an application from Options UK Personal Pensions LLP for judicial review of a FOS decision in respect of investments made into an execution only SIPP. The FOS had held that the firm (then called Carey Pensions UK) had breached FCA Principles even though it provided solely execution only services to its customer, Mr Fletcher. Mr Fletcher had complained after he lost all his pension fund following an investment referred to Carey through an unregulated introducer. The Ombudsman held in 2022 that the firm should have carried out due diligence on both the introducer and the investment to good industry standards.

The firm applied for judicial review of the Ombudsman’s decision, but the Court of Appeal rejected the application on all grounds. The firm had claimed that:

• the Ombudsman should have explained that he was awarding compensation in circumstances where a court would or could not do so, and why he had reached that decision: the underlying complaint appeared to the Court of Appeal to be that breach of Principle is not actionable by a complainant. The Court of Appeal said that there was nothing in the FSMA regime to warrant a distinction between rules that are actionable and those which are not but that, in any event, in this case, if there was a breach of Principle 6 there was also a breach of COBS 2.1.1R;
• the Ombudsman erred in his finding that the firm owed duties to prospective SIPP members to carry out due diligence on introducers and investments. The firm complained on five bases, all of which failed, but the judge noted that the nature of the ultimate customer relationship (in this case execution only) could not bear on the obligations the firm had as a result of relevant laws, regulations and best practice before the customer contract was even entered into; and
• the Ombudsman’s conclusions in relation to particular breaches of duty were unreasonable: the judge said the matters the claimant relied on fell far short of meeting the high hurdle required for a finding of irrationality.