Investing In Storage Pods
The firm stands accused of working with unregulated introducers to facilitate investments in Store First storage pods, which were unsuitable and are now deemed “worthless”.
A client, who invested his pension in the illiquid commercial property, is currently at the High Court for a hearing against the firm, which will act as a test case for about 90 more clients with liabilities of £3m.
A ruling against Carey Pensions – which is expected imminently – could lead to see a number of organised wind-ups.
Berkeley Burke SIPP
It has also been alleged that another SIPP provider, – Berkeley Burke – established SIPPs in breach of rules and regulations, after unregulated third-party firms advised retail clients (clients without investment experience or the capacity to cope with the loss of their pension) to transfer their traditional private or occupational pension funds to a Berkeley Burke SIPP in order to invest into a variety of high risk schemes.
SIPP Companies Could Close
If Carey Pensions is found at fault, it will have a profound impact on the SIPP marketplace.
Depending on how the SIPP providers‘ professional indemnity insurance is arranged and their financial situation, we could see some company closures. The quality of providers’ acceptance of high risk or unregulated investments is critical when carrying out due diligence.
Assets like Harlequin, The Resort Group, Green Oil Plantation, InvestUS Elysian Fuels and Store First should ring alarm bells, because of the latest court cases and HM Revenue & Customs action against them.
The case against Carey also comes at a turning point in respect of the regulatory approach to handling such claims.
Up until recently, claims where no regulated advice was involved did not fare well with the Financial Ombudsman Service (FOS) or the Financial Services Compensation Service (FSCS), which considered many such claims to be outside their jurisdiction.
But in January the FSCS declared it was accepting claims in relation to three SIPP firms, which had accepted unregulated investments through unregulated introducers, for the first time.
This certainly gives a glimmer of hope to any investor who had lost money and had nowhere to go.