TIDMSTM
RNS Number : 2232N
STM Group PLC
18 May 2020
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
18 May 2020
STM Group Plc
("STM" or "the Company" or "the Group")
Judgment in favour of Carey Pensions in
Adams v Carey case
STM Group Plc (AIM:STM), the cross-border financial services
provider, is pleased to announce the outcome of the judgment in the
long-awaited Adams v Carey case, which has been found wholly in
favour of Carey Pensions LLP ("Carey"), with Mr Adams' claims
against Carey being dismissed on all grounds.
The judgment was handed down at 9.30 am this morning and relates
to a claim by Mr Adams against Carey Pensions UK LLP for loss of
value in an investment which was held within a Self-Invested
Pension Plan (SIPP). The case was heard in March 2018.
The key elements of the case were as follows:
-- Mr Adams was introduced to Carey by an unregulated introducer
-- Mr Adams transferred an existing pension fund into a SIPP administered by Carey
-- Mr Adams also instructed that his SIPP purchase a number of rental units from Store First
-- Carey is a non-advisory pensions administrator and therefore
carried out the transaction on an execution-only basis as
instructed
-- Mr Adams' investment in Store First did not perform as he had
expected, which resulted in Mr Adams bringing a claim against Carey
seeking damages
A concise summary of the judgment can be found at
https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Financial-services-and-dispute-investigation/Clarity_for_SIPP_providers
, who acted as the lawyers for Carey.
Alan Kentish, Chief Executive of STM Group Plc, commented:
"The judgment is a very welcome and clear precedent for the
whole of the UK financial services sector given the increased
litigation and use of the Financial Ombudsman to determine
complaints. This judgment gives a solid legal footing for these to
now be considered in the context of this ruling.
"The STM Board considers that potential implications for any
financial institution carrying out execution-only business to have
become wholly responsible for their client's decisions would be
inequitable and inappropriate. I am sure many financial service
providers and institutions, as well as their respective trade
associations, would wholeheartedly agree and can now look to the
future with greater confidence post this ruling.
"STM is keen to put this case behind it and ensure its UK
business, 'Options, for your tomorrow', realises its full
potential."
Christine Hallett, Managing Director of Carey (now rebranded as
'Options, for your tomorrow'), added:
"We are pleased that the judgment has now been delivered, and
that the judge has found in our favour on all counts.
"It has been a long time coming and whilst we were confident of
our position, the lengthy, comprehensive and detailed judgment
recognises within it our approach to implementing strong
contractual agreements and documentation, together with robust
systems, controls and processes within the business. It was also
clear that as a SIPP provider we are expected to carry out
execution-only business based on decisions made by our clients.
"It is a judgment that has been long awaited by the SIPP
industry and consumers alike, and gives clarity to what is expected
of a SIPP provider under English law and the FCA Conduct of
Business Principles when acting upon the instructions of a client.
In addition, it has given a much better understanding of the legal
relationship between an introducer and the service provider which
will provide valuable guidance for both consumers and industry
professionals.
"We now look forward to turning our minds to growing our UK
businesses and maintaining our service levels for our clients."
Details of the court decision:
The claim was based on three different principles; 1) that under
the FCA's Conduct of Business (COBS) 2.1.1 that Carey had failed to
act fairly, honestly and in accordance with the best interests of
its client; 2) that under FSMA section 27 Carey was responsible for
any advice (known or otherwise) given by the introducer and that
the introducer 'arranged' the underlying investment; and, 3) that
Carey was in a joint venture with the introducer and was thus
liable as joint tortfeasor for its actions.
In all three claims, the judge found in favour of Carey.
In the context of COBS 2.1.1R, the judge found that all of the
contractual documentation between Carey and Mr Adams was clear that
Carey was acting on an execution only basis; that it was not
advising Mr Adams; that the investment in Store First was high risk
and/or speculative; and that Mr Adams was responsible for his own
investment decisions. In that context, the judge concluded that
COBS 2.1.1R could not be read as imposing on Carey a duty to advise
or comment on the suitability of the SIPP or investment, as that
would be unlawful (noting that Carey does not hold the relevant
permissions to advise); or to reject a 'high risk' investment. The
court found that Mr Adams had to take responsibility for his
investment decision.
In addition, under Claim 2 the judge found that the actions of
the introducer fell far short of 'arranging' the investment, and
that, crucially, the point at which the issue must be considered is
when Mr Adams gave his instruction to invest. Prior to that point,
Mr Adams was not bound to continue, nor had he suffered any loss.
Also, the judge found that, on the evidence, the introducer did not
advise Mr Adams to enter into the SIPP.
On the final point, the judge concluded that facts were entirely
inconsistent with any conclusion that Carey assisted in the
commission of a tort by the introducer and that there was no common
design.
For further information, please contact:
STM Group Plc www.stmgroupplc.com
Alan Kentish, Chief Executive Officer Tel: Via Walbrook
Therese Neish, Chief Financial Officer
finnCap www.finncap.com
Matt Goode / Simon Hicks - Corporate Finance Tel: +44 (0) 20 7220
Tim Redfern / Richard Chambers - ECM 0500
Walbrook www.walbrookpr.com
Tom Cooper / Paul Vann Tel: +44 (0) 20 7933
8780
Mob: +44 (0) 797 122
1972
tom.cooper@walbrookpr.com
Notes to editors:
STM is a multi-jurisdictional financial services group which is
listed on the AIM Market of the London Stock Exchange. The Group
specialises in the administration of client assets in relation to
retirement, estate and succession planning and wealth
structuring.
Today, the Group has operations in the UK, Gibraltar, Malta,
Jersey and Spain. STM has developed a range of pension products for
UK nationals and internationally domiciled clients and has two
Gibraltar Life Assurance Companies which provide life insurance
bonds - wrappers in which a variety of investments, including
investment funds, can be held.
STM's growth strategy is focussed on both organic initiatives
and strategic acquisitions.
Further information on STM Group can be found at
www.stmgroupplc.com
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END
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