In 2012 Lorry Driver Russell Adams was down on his luck. His bank, the HSBC, had decided to call in his £170,000 mortgage on his £380,000 home. Desperate to raise money he thought of cashing in his frozen £52,000 private pension from Friends Life. He spotted an ad “‘release some cash from your pension” and was directed to CLP Brokers.
A friendly man called Ben Shepherd, told him “I could transfer it into a pension that would perform better and allow me to invest in better investments. I did not know much, if anything, about pension investment at the time and trusted what CLP told me.”
Since the transaction was going to be handled by a reputable private pension management provider then called Carey Pensions UK ( now Options UK Personal Pensions) he was reassured.
He was directed to invest in Store First, a Blackburn based storage facility, that made its money letting out what are known as store pods to people.
Mr Adams told the court that Ben was very keen on this because it was property and he made it sound safe and good for me. He then took out an execution only SIPP with Carey to include his investment. Ben was on commission for putting business that way.
What he didn’t know that CLP, based in Spain, was not authorised by UK law to give any financial advice. It was run by Terence Wright and Lesley Wright. Although Carey was unaware of this until May 2012, the Financial Conduct Authority had posted a warning notice in respect of Mr Wright in 2010. The notice warned that Mr Wright was not authorised under Financial Services and Markets Act to carry on a regulated activity in the United Kingdom, explaining that it believed that he “may be targeting UK customers via the firm Cash In Your Pension”.
Worse was to come. Store First was a dud – it hardly made a penny and Mr Adam’s investment was worthless.
So Mr Adams went to court. At the first hearing the judge found for the private pensions industry and exonerated Carey Pensions for any liability of managing an investment run by a guy barred from trading in the UK.
But last Thursday the Court of Appeal overturned much of the ruling saying Mr Adams was entitled to his money back plus compensation and furthermore Carey Pensions now Options UK Personal Pensions – could not escape liability by trying to blame Mr Adams for his own misfortune. The pension firm tried to appeal to the Supreme Court but were blocked by the judges.
The judgement has widespread implications. For a start some 580 other people had been advised to invest in the firm Store First and could claim their money back. The ruling also has wider implications in that your friendly private pension provider may well have to stop recommending you high risk investments by unregulated – or to be more frank- dodgy providers or risk the fate of Carey Pensions.
The judges in my view took the right decision. They said anymore with only £50,000 to invest is not a sophisticated investor and should be better protected than someone with a £1m to invest.
” Fresh opportunities for unscrupulous entities to target the gullible” -judge
Perhaps the comment from Lady Justice Andrews sums this up the best:
“As the unhappy history of the transfers of small personal pensions into SIPPs holding high risk investments related in that judgment illustrates, the liberalisation of the pension regime in 2006 brought with it fresh opportunities for unscrupulous entities to target the gullible, the greedy or the desperate.
“There is nothing to prevent a regulated SIPP provider such as Carey from accepting instructions from clients recommended to it by an unregulated person, and from doing so on an “execution only” basis. But the basis on which they contract with their clients will only go so far to protect them from liability. If they accept business from the likes of CLP, they run the risk of being exposed to liability under s.27 of the FSMA.”
The full case is here. There is also a report in the Financial Times here.
Westminster Confidential 
Well done for fighting for your rights Mr Adams!
I was prompted about the State Pension scheme;
*How can the state re-write rules without consultation to those affected?
*Investors have NO option to drawdown
*Investors have NO option to move their investment
*The provider can take away access to it without personal notification.
This Government’s party is so keen to privatise anything, why can’t we have access to our State pensions? Clearly the Govt can’t then take it away, spend the contributions elsewhere beforehand nor move goalposts. Perhaps state pensions should not be held in “reserve” by Treasury.,..after all, who polices the police?
Ask any one of the 3.8m women who have each had up to £40k trousered by the State by “fair” SPA rises,
that’s £152bn stolen earnings entitlement stolen from State pension scheme that women have paid for to receive at age 60. But have to wait until at least age 66…that’s yet another £25.5m income stolen for a further year delay/pocketing of entitlements in the second tranche of SPA increases.
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And was not treated as their earned and paid for pension should have been classified as Deffered, at least once retired we would have the increases that would bring. The court state that persons/ organisation had no right to offer advice as unregulated in the UK. THE SITUATION WE ARE IN IS WE HAD NO DISCUSSION FROM OUR PENSION ADVISERS(Govn) about changes to pension policies. 18 months delay to six years lost of investment. Withheld financial data, that could have allowed the effected to make investment in another pension provider. Stolen pension pots of 40 to 50k disappeared no trace of 3.8 million women, disadvantaged financially due to lack of governance, clarity and above all honesty. These 3.8 million women will never forget the treatment handed out to them and will not support any party that doesn’t address this matter, this includes their families who could be pressured to work until they are 70 years old, that at the moment is on the books within the next ten year, or sooner if they change it again without notice.. more American ideology…
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Well Said
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What about a victory for 1950s women’s state pension gone without pension for six years rule for men and a non existent rule for us women….: where did our pension money go or who robbed the 1950s women ….Blair Brown Major Thacher hand in glove together
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Well done MR ADAMS for fighting for your corner. theres far too many scammers out there that will try and take anybody for a ride and will if they carry on getting away with it as nothing seems to be getting done to stop it like all the scam texts phone calls emails that keep doing the rounds you have to be very careful and don’t click or push buttons on anything you have doubts about or look dodgy. my advice for pensions and investments is to see a financial adviser first check the financial conduct authority records make sure they are qualified to give financial advise before you make an appointment with them. their advice is well worth paying for when you work long and hard to contribute into these pensions so you don’t want to put yourself in to a position where you could lose them. the government could do more to help its a minefield out there with pensions and when you have to work 6 years longer before you can have your state pension it makes it even more difficult to make the right decisions for you. so a financial adviser is the right path to take they explain what you can and shouldn’t do and what they think is best for you. I know because I’ve seen one myself and he was great. explained everything clearly and gave good advice.
take care everyone and thankyou David for another valuable report.
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My “friendly advisor” is no longer in business – on his advice at a stressful time when I’d lost my job and needed the tax free lump sum – he advised I put my £30k pension savings in something called a “flexible annuity” – he told me the rest of my money would stay invested, that fund would perform well – since found out that the fund performance benefits the insurance company not me. I get a pittance each month. When I die they keep my money. Where are the regulators and what are they doing to protect ordinary savers from terrible products and sharks 🦈 on commission? The company says they aren’t liable as they didn’t sell it to me directly.
Now have to work til age 66 when I get state pension.
Ripped off twice- Government and pension industry
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sympathise -misled by both the government and the private pensions industry
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Pleased for you Mr Adams,
I would like to believe that there’s hope for the people like me that have been swindled out of our pension by the government moving the goal posts to suit the establishment.
I am still dumbfounded how people who have now contributed into the system as a whole can get benefits, I have work since leaving school (am now 65 , still working) and have to wait again to get my pension after the 3rd time of moving those goal posts.
So Mr Adams enjoy spending your pension
And good health to you. 💙🌈💙
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I still think it’s crazy that ‘rule of law’ actually boils down to one man or woman’s say so at the end of the day…prime example here, ruling one lost, 2nd time flipped it completely….and most of us can’t get a first court date never mind a second one!
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The regulator should keep a more watchful eye, pensions industry is self serving in my experience
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