ALTHOUGH THE number of complaints relating to spread betting received by the UK’s financial ombudsman is relatively low, it doubled to 108 in the year to March 31st. The following case study just published by the UK ombudsman relates to a complaint that, while not upheld, illustrates some of the issues that can arise with spread betting:
Mr D held an account with a spread-betting firm. He had taken what is known as a “long position” on the shares of a particular company and was expecting to make a sizeable profit as a result.
Shortly after he had taken this position, however, the value of the shares dropped so sharply that it looked as though his loss would be greater than the “margin” (or deposit) that he had paid the firm in case of such an eventuality.
As is usual in such situations, the firm phoned him to ask him for an increased margin. Unfortunately, it was unable to get any response from the number it called. It therefore “closed” the position – and Mr D made a substantial loss. Mr D said the firm should compensate him for this loss, as it had “made little effort” to contact him. He said it had called him on an out-of-date mobile phone number, even though it must have been aware that he had changed his number. Having failed to contact him by phone, it had not then written to him.
The firm rejected Mr D’s complaint. It said it had phoned him on the number he had registered as his contact number when he opened his account. Its terms and conditions clearly stated that customers must provide details of any changes to their contact details in writing. Mr D had not done this.
We examined the firm’s terms of business. Overall, we did not consider it unreasonable or unfair for the firm to require customers to notify it – in writing – of any changes in their contact details.
We said the firm could not be held responsible for the breakdown in communication and we did not uphold the complaint.
Caroline Madden
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