Contract For Difference Case: Trading Company to Pay $61,000 Says AFCA

AFCA rules in favor of the complainant in the CFD trading case, ordering the financial firm to pay $61,000. Allegations include failure to conduct suitability tests and disclose important information.

The Case

The complainant opened a Contracts for Difference (CFD) trading account and a share trading account with IG Markets Limited on December 14th 2016.

The complainant says he should not have been permitted to open the trading accounts on the basis an appropriate suitability test would have identified he lacked the relevant knowledge and experience to do so. He also says the financial firm failed to disclose features such as price setting, margin requirements and spreads properly.

Further, the complainant says the financial firm induced him to continue to trade and, in breach of its own safeguards, permitted him to fund his account with third-party credit cards. He also says there were platform system issues that led to him suffering losses. Finally, the complainant alleges he advised his Premium Client Manager of his gambling addiction in June 2017, but no action was taken to address this issue.

The financial firm said it met its legal obligations when opening and operating the accounts and the complainant passed its suitability assessment. It says it acted swiftly to close the accounts on November 9th 2020 after it was informed of the complainant’s gambling addiction in October 2020.

AFCA’s Findings

IG Markets Limited claimed it had a Client Qualification Policy but has not evidenced it. Further, despite the complainant’s early losses triggering the need for a telephone call, the financial firm took no further action to re-assess the complainant. As a result, there is no basis to find the complainant was suitable to open an account.

AFCA did find that the complainant’s other allegations were made in support of a general assertion the financial firm was lax in its approach to its legal and regulatory duties to clients. However, he did not sufficiently evidence these claims so they do not affect the outcome.

Determination

This determination is in favour of the complainant, with IG Markets Limited being required to pay $61,698.24 plus compound interest.

Getting Financial Help

Contact us if you’re questioning the advice you received from a financial advisor and are thinking about taking steps against them. We are committed to ensuring our clients receive the best possible advice and guidance on their situation, especially in financial matters. You can contact us online, call us at 1300 433 533 or email us at enquiry@fdlegal.com.au.

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