IG Index 'stole' £5500 back from me

[stevespray]

Hi everyone

I would like to ask if any of you has been in a similar situation before. basically I buy UK Real Estate sector from IGindex today @ £60 a point using their online platform. After 2 minutes I look back, and realise I have got a nice £5500 profit, and I decides to close it.

Then someone from IGindex called me and claimed it was some error on their part that the points they gave was 100 points below what it should be (it follows some real price from bloomsberg website apparently), and hence he said I HAVE TO give them the profit back according to their term and conditions. I said no I am not going to do it, and I will complain to the FSA or even contemplate legal action. but they took back my profit from my account anyway.

So basically, who is right and who is wrong in this case? I feel that £5500 is rightfully mine,if the error was against my favour, I highly suspect that they'd have kept quiet and kept my money.

Legally speaking you would have a reasonable chance of getting the money from them. Why? Because they entered into a contract with you. Dispite what their T&C might say spread bets are enforceable by law. This means that the law looks at the situation very simply - if they dont want the liability then they shouldnt 'accept' your proposal to bet.

When you opened the bet 'legal title' to the asset passed from them to you. In law they cannot just claim this back as they see fit. This is because a contract (in terms of the bet) has been formed.

We've been having a slightly similar conversation on the Capital Spreads thread.

The bottom line is that you proposed a bet to them which they accepted - the bet is therefore binding.
It is no different to firms who sold stuff online for wrong prices. Once the contract was formed with the clinets they had to make good on delivery.

In my opinion all the firm could really do is approach you and ask you to cancel the bet and explain their reasoning. The final outcome would be down to your choice and not theirs.

Steve.

 

[poker_trader]

I emailed them to complain and this is the reply I get back from them. To Steve: i thought so too, it was their fault. I don't know whether this minute details gonna change anything, but basically at first I tried to bet £100 a point, and computer gave the message 'contacting dealing desk....' and then it said the size was too large. then I bet £60 a point, computer also said 'contacting dealing desk...', then the deal went through. So I think some dealer actually approved the deal, it wasn't even a automated transaction done by the software.
I don't think it will cost me anything to send a complain letter to the FSA, so maybe I will give it a try.




Dear Sir,

Thank you for your email. I have now had the opportunity to fully review this situation and speak to my colleague, Abbas, whom you spoke to yesterday. The reason that your position was closed is because you were dealing off a manifestly erroneous price The price that you dealt off was 100 points too low and therefore the profit that you realised was incorrect. I would like to draw your attention to Section 27, paragraph 1 of our customer agreement that states;

(1) We reserve the right to, without your consent, either void from the outset or amend the terms of any Bet containing or based upon a Manifest Error. If, in our discretion, we choose to amend the terms of the Manifestly Erroneous Bet, the amended level will be such level as we reasonably believe would have been fair at the time the Bet was entered into. A ''Manifest Error'' is any error that we believe to be obvious or palpable. In deciding whether an error is a Manifest Error we may take into account any relevant information including, without limitation, the state of the Underlying Market at the time of the error or any mistake in, or lack of clarity of, any information source or pronouncement upon which we base our quoted prices.

The full text of our customer agreement can be found at the following link.

IG Index - Customer Agreement

After speaking to Abbas he explained that he told you that the bet was erroneous and that it would not stand. He did ask if you would like to be re-instated at the correct level but I believe the call disconnected at that point. At this stage we had no choice but to cash correct the full value of the bet.

Please accept my apologies for this entire situation but the price that you bet on was completely erroneous and we were within the rights as outlined in our customer agreement to do delete your bet.

Please do not hesitate to contact me if you have any further queries on this.
Kind regards,

Chris McBride
IG Index plc Client Services

Friars House | 157-168 Blackfriars Road

London | SE1 8EZ | IG Index - Financial Spread Betting |
Freephone: 0800 409 6789
International: +44 (0)20 7896 0079

Fax: 0207 390 3816

 

[ian]

so I'm surprised you have that sort of wonga but didn't do your due diligence. A good learning Iimagine.

Eh?

 

[arabianights]

How blatant an error is this? I don't understand the spread you're trading but I think the only fair way they can object is if there is a silly spread there. Given it's only five and a half grand you might as well fight for it if only for my amusement anyhow.

 

[stevespray]

PT - The law looks at the point at which a contract is formed. In this case it is clear that the firm formed a contract with you and then sought to break that contract. If it was as simple as putting a term or condition in a customer agreement to get a firm off the hook (after a contract had been formed) then every online shopping outlet would do this..... clearly they dont!

It is vital that you understand that once a contract is formed the legal right to that item passes to you. In this dispute Party A (You) made and offer to Party B (IG) to enter into a bet on a specific instrument at a specific price. It is then up to Party B to consider your 'offer to contract'. If they do not wish to accept your 'offer to contract' then they can decline and no contract is formed. If, as in this case, they choose to accept your offer then a contract is formed. They cannot retrospectively reconsider your 'offer to contract' after the contract is formed - this is basic contract law. The law is specific on this point so that both parties know and understand A ) the point at which a contract is being entered into, and B ) That the contract is binding from that point onwards. In my opinion it is highly unlikely that any firm would be able to get a term or condition, such as the one which is quoted, to stand up in a court of law - The term or condition is clearly an attempt limit or exempt the firm from its obligations after having formed a binding contract with a client. The law would most likely say that the firm had a valid chance to refuse the 'offer to contract' when the offer was made; it was their choice to accept your offer. In contractual law the 'point of no return' is regarded as having been passed when acceptance occurs.

The problem which you have is that the firm is in control of their back office systems. They can reach in and alter your account with or without your say so. This ability doesnt mean that they will act correctly in the eyes of the law. You have a contract which entitles you to the money - possesion is nine tenths of the law.

Steve.

 

[poker_trader]

thank you. I will contact the FSA and will keep you guys posted.

 

[stevespray]

thank you. I will contact the FSA and will keep you guys posted.

I dont think the FSA will be able to help you. Someone on the Capital Spreads thread contacted them and the 'information' that the FSA provided (via the telephone) seemed to be based on the guys personal opinion rather than a legal perspective.

Steve.

PS I notice that the letter from the firm is from 'Client Services' - Perhaps you should get it sent up a level to their Compliance Department.

 

[forexangel]

There is no way you are going to get anywhere with this. You traded a wrong price and closed seconds later.

You've agreed to the T&C in opening the account. As a previous poster said, you never had the 5500 pounds in the first place.

Bottom line: you tried to rip off a bookie and they stopped you. You have no comeback at all on this one.

That's the start and finish of it in my opinion.

 

[fibbinstarchi]

There is no way you are going to get anywhere with this. You traded a wrong price and closed seconds later.

You've agreed to the T&C in opening the account. As a previous poster said, you never had the 5500 pounds in the first place.

Bottom line: you tried to rip off a bookie and they stopped you. You have no comeback at all on this one.

That's the start and finish of it in my opinion.

You are so wrong. He has every chance of getting his money back, Steve is correct with his contract advice and I have added to his reputation for giving sound advice. I suggest the trader who was illegally dealt with which ended with his 'legal contract' winnings being taken back has every chance of getting all his winnings back in a court of law, so I personally would seek advice from a Solicitor, do not give the spread company and head up on this, just do it. I would certainly rethink my position with any future dealings with this company whilst this is going on, I certainly would not trust my money in their accounts.

 

[DT]

He has got about as much chance of getting dixons to sell him a plasma TV for 2 quid after they made a pricing error on thier web site....

The house price index is somewhere just below the 200 mark representing an average UK house price of 200 grand so in order for you to have been quoted a price 100 points out you'd have had to have been quoted a price of around 100 - i.e. representing an average UK house price of 100k - I don't think you need access to OTC prices on bloomberg to know that the figure you were quoted was very very wrong.

If you've knowingly traded a wrong figure then what were you expecting??? If you didn't realise that it was wrong then what on earth are you doing trading that product.

Also just a minor point - what has any of this got to do with spread trading?

 

[poker_trader]

1. you confuse UK Real Estate Sector index with Halifax House Price Index. have a look, then decide for yourself.

2.common sense tell you that's it's spread trading we are talking about...

3.I think Dixons might honor the deal and turn it into good publicity for them?

 

[forex999]

Hi everyone

I would like to ask if any of you has been in a similar situation before. basically I buy UK Real Estate sector from IGindex today @ £60 a point using their online platform. After 2 minutes I look back, and realise I have got a nice £5500 profit, and I decides to close it.

Then someone from IGindex called me and claimed it was some error on their part that the points they gave was 100 points below what it should be (it follows some real price from bloomsberg website apparently), and hence he said I HAVE TO give them the profit back according to their term and conditions. I said no I am not going to do it, and I will complain to the FSA or even contemplate legal action. but they took back my profit from my account anyway.

So basically, who is right and who is wrong in this case? I feel that £5500 is rightfully mine,if the error was against my favour, I highly suspect that they'd have kept quiet and kept my money.

YEs it has happened to me!!! in fact literally quite regularly guess at least one every quarter. Last time it happened was when i got Cad Options, bought in good faith, yes the price did appear cheap, after 3 days sitting on a nice profit, closed it, with a nice profit

They voided the whole bet stating that the entry price was wrong i mean their error!
but equally it has also happened when i have also been at the other end ie end paying too high for a call options, the market goes up substantially but i still lose!!! - when this happens i have no legs to stand and have to take the loss

this is bull****

 

[A Dashing Blade]

. . . equally it has also happened when i have also been at the other end ie end paying too high for a call options, the market goes up substantially but i still lose!!! - when this happens i have no legs to stand and have to take the loss

Couple of points
1) That's what you get when you buy (effectively) OTC call options.
2) You're trading options without valuing them yourself

Sorry to sound harsh but caveat emptor.

 

[stevespray]

He has got about as much chance of getting dixons to sell him a plasma TV for 2 quid after they made a pricing error on thier web site....

The house price index is somewhere just below the 200 mark representing an average UK house price of 200 grand so in order for you to have been quoted a price 100 points out you'd have had to have been quoted a price of around 100 - i.e. representing an average UK house price of 100k - I don't think you need access to OTC prices on bloomberg to know that the figure you were quoted was very very wrong.

If you've knowingly traded a wrong figure then what were you expecting??? If you didn't realise that it was wrong then what on earth are you doing trading that product.

Also just a minor point - what has any of this got to do with spread trading?

...... Just for your info it was Argos which had the plasma TV's £2.49! And yes, by law they should of supplied them at that price since they formed contracts with clients through their internet website. In the end they didnt supply them because none of the clients challenged them. The same thing happened with the Kodak website and a digital camera. This time a client started a legal action through Ilford Crown Court to enforce the contract. The matter never came to trial becauce Kodak backed down (in all probability realising that they didnt have a legal leg to stand on) and supplied the cameras at the price agreed in their contract which was formed basis an incorrect price on the website.

The point is that firms should not form contracts with clients unless they are sure about price since the law does not allow retrospective reviews of clients 'offers to trade'. This is a danger for the firms.

I would also point out that most firms T&C state clearly that the client is betting, not on the level of the underlying market, but on the level of the firms own index in a given product. Most firms also state that they reserve the right to price their product away from the underlying market if the situation suites them.

In my opinion, if such a matter came to court, the firm would have very little defence so long as the client could produce contract notes which showed that a contract had actually been formed in respect of the disputed bet.

Steve.

 

[grantx]

Forex999,

You need to differentiate between "cost" and "value".

Grant.

 

[grantx]

Steve,

Something which has parallels re current discussions:

"Bank Charges Test Case Result Due This Thur 24 April. The result of the Office of Fair Trading and Banks' court case will be handed down on Thurs. This will answer whether it’s possible bank charges can be unlawful under unfair contractual terms rules. If they can, the OFT must then say whether they are unlawful, which it’s likely to do".

From Moneysavingexpert.com.

Grant.

 

[poker_trader]

Thank you so much Steve for all that helpful advice. I have 2 questions.

1. I am quite busy at the moment and don't really have time to bring this to court. Do you think my chance of winning this legal battle is still the same if I do it in let's say 6 months?

2.Should I really get a laywer, or can I just present the case to court without one? laywers seem to charge way too much (about £180/h after VAT added, and they love to claim hours that they spend typing the documents or whatever too)

 

[Phil Mibbutz]

......
I would also point out that most firms T&C state clearly that the client is betting, not on the level of the underlying market, but on the level of the firms own index in a given product. Most firms also state that they reserve the right to price their product away from the underlying market if the situation suites them.

Steve.

That's the important thing to remember, and I'm surprised that no-one has challenged an SB co in court on this basis. Maybe it hasn't happened because they always settle if they realise they're dealing with a client who really means business?

 

[DT]

2.common sense tell you that's it's spread trading we are talking about...

You're talking about 'spread betting' which has got nothing to do with spread trading. I'm surprised this thread hasn't been moved already to the correct forum.

On the subject of the thread in general I don't think IG index have any case to answer tbh....

 

[nine]

Good point DT. I hadn't noticed when I replied earlier. Anytime you see a misplaced thread please feel free to hit the complaint button and point it out to us. Sometimes you just don't noticed (I dealt with 6 spammers yesterday and banned 5 of them as well as arguing the value of advisors who are also vendors so you can see the problem )

For crying out loud guys. They are bucket shops but they have to make money - period.

Its easy. They are right and you are wrong. Why? Because you signed a piece of paper saying that was the case.

From a more practical perspective. You will find that:
- if they misquote and its a small one then you will benefit if it doesn't happen often
- if they misquote and its to their advantage you can always call them and they will check it and give you the money back

This was my experience with finspreads when I once traded a system that needed small position sizes (averaging in up to 18 times against the trend needs a bit of margin ). Note that I do NOT recommend the use of spreadbetters.



When in doubt - the broker is right unless you can prove otherwise. With a real broker this is not so bad because they don't take a position against you --- but a spreadbetter is your counterparty and they WANT you to lose. So lose you will.


PS. What does NSS mean Bramble, I must be slow this morning although I did enjoy your exchange with grant.



Disclaimer: This post is my own personal view and does not necessarily represent those of the management of T2W.

I note that IG is probably better than many spreadbetters ... but the issues will always exist. It will be interesting to see if they become worse when any of these companies come under financial pressure (two brokers failed on margin loans and overspending in Australia in the last month ... which will be the first spreadbetter?)