Adams v Options UK Personal Pensions (formerly Carey Pensions UK LLP)

Judgment dated 1 April 2021

The case:

  • provides more guidance on the meaning of advising and arranging investments
  • highlights the risk to self-invested personal pension (SIPP) providers of accepting introductions from unregulated introducers and reinforces that contractual controls may only go so far
  • puts SIPP providers on the hook to repay unwound investments if section 27 FSMA is engaged and they fall outside the protection of section 28 FSMA
  • reemphasises the primacy of consumer protection and the need to protect consumers from their own folly.

In the past 15 years, SIPPs have become a more mainstream way for individuals to manage their own pension funds. The increase in SIPPs comes with an increase in claims made by consumers, including complaints made to the Financial Ombudsman (FOS) and Pensions Ombudsman (PO). This case will be of interest to SIPP providers, their professional indemnity insurers, the FOS and PO as it erodes some of the comfort provided in the previous High Court judgment about the nature and scope of duties owed by a SIPP provider. The Court of Appeal reversed part of the decision made by the High Court [which we reported on here]. The parent company of Options has asked for leave to appeal the Court of Appeal's FSMA finding to the Supreme Court. The PO had confirmed it was going to reopen any complaints against Options, however this may now be put on a further hold pending the outcome of the request for leave to appeal.


Mr Adams was introduced to Options, an authorised SIPP provider, through CLP Brokers Socieded Limitada (CLP), an unregulated broker. Options facilitated investments on an execution-only basis.

Mr Adams brought a claim against Options to terminate the contract and for the diminution in value of the investment held within his SIPP (£55,000 reduced to £15,000 as the storage pod rental scheme in which he was invested failed to perform as expected). It is worth noting that some other 580 individuals made the same investment through their introduction to Options totalling around £29m over a six-month period.

The claims were dismissed in the High Court and Mr Adams appealed on the grounds that:

  1. Options had failed to act honestly, fairly and professionally in accordance with the FCA's Conduct of Business Sourcebook (COBS) 2.1.1R by accepting the investment and failing to warn him of the risks. By way of reminder, Mr Adams sought damages under section 138D of Financial Services and Markets Act 2000 (FSMA) for Options' alleged breach of the duty to comply with the FCA's Handbook.
  2. the transfer to Options and the investment in the storage pods should be unwound under section 27 of FSMA because they had been made as a consequence of things done by CPL in breach of the general prohibition against carrying on regulated activities unless authorised or exempt. Breach of section 27 of FSMA would render the SIPP unenforceable and result in Mr Adams being able to recover money transferred under the agreement and compensation for any loss suffered.


  1. Mr Adams claimed Options had failed to act honestly, fairly and professionally by accepting the investment and failing to warn Mr Adams of the risks. Both the High Court and the Court of Appeal concluded that the alleged arguments in relation to the breach of COBS 2.1.1R were fundamentally different to those raised in Mr Adams' particulars of claim and were not developed or addressed by expert evidence and so declined to comment. In any case, the court noted that Mr Adams may have struggled to satisfy the court that any breach of duty caused the loss. This ground of appeal was dismissed and so the High Court decision on this element of the claim remains good law, i.e. the starting point is the contract between the parties (which was clear that Options was acting on an execution only basis).
  2. The Court of Appeal identified that CLP had given advice to Mr Adams to switch to the SIPP and arranged a relevant investment in the storage pods in breach of the general prohibition of carrying on regulated activities unless authorised or exempt. The agreement between Options and Mr Adams was a consequence of this which triggered section 27 FSMA although, under section 28 FSMA, the court had a discretion to nevertheless permit Options to enforce its contract with Mr Adams if it would be just and equitable to do so. However, the Court of Appeal found that section 27 FSMA placed the risk of dealing with unregulated third parties onto regulated firms and therefore Options could not escape liability under the section 28 FSMA defence. Further, the fact Options had concerns about CLP, which it did not share with Mr Adams before proceeding with his investment, meant it would not be just and equitable to grant relief under section 28 FSMA. Mr Adams was therefore able to unwind his investment and obtain damages. 

This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.