Spreadbetting - IG complaint

[mr_put]

"Interesting that this thread is about not being closed out while there's another thread attacking IG for closing someone out" - that's the whole issue here, there's no certainty about how IG monitor and manage accounts, whether it being closing positions out within credit limits, or allowing them to remain open. this is a tricky enough business as it is, taking bets on which way the market will go, you don't need the additional uncertainty surrounding your account operation..will they, won't they, you just need to know. the systems are there to allow IG to do this, why don't they?

IG didn't contact me for margin on the day in question, they just sent me an email the next morning asking for 92k.

 

[rwb]

the FOS rejected my complaint based on a strict interpretation of IG's T&Cs, so looks like this will have to go down the legal route.

talking to a lawyer, looks like IG have breached a number of FSA / MIFiD rules, so there may be a defence there...

And DEFENCE is exactly what you should consider if you are seriously thinking about court proceedings.
Why don't you let them take you to court, not the other way round, that way you can see exactly what grounds they are using for their claim. I would think their action would be easier for you to defend than the other way round.
That is assuming that they risk the court case, they would weigh up their own risks in terms of costs, publicity and most importantly - likely success (no guarantee regardless of how water tight the T&C's are, it is possible that a judge would consider that T&C's which allow a relatively rookie trader to run up such a huge loss relative to account size are erroneous and unfair).
The fact that they haven't issued proceedings against you yet after this length of time since incurring the debt is ominous.
just my 2c worth, not advice or recommendation

 

[Jack Hughes]

My experience is that IG happily break their own rules about margin when bets are either opened or closed.

 

[gle101]

Market makers systems are not foolproof. I have experience this a couple of times, and since a couple of years back include this in my risk profile when trading with SB. Why people bet big money with SB I simply do not understand. So many things can go wrong when you are dependent on a third party execution.

Anyway, an interesting case and something to learn for all of us (true or not). I am surprised that IG has not taken any legal action so far in order to collect the money. Even if you have a debt to IG, it is not fully valid until they have legally tested the claim against you. The reason that they are not taking legal action against you could be on grounds that it will not carry conviction in court.

As I understand it, the MiFID financial directives overrides the T&C, and there could very well be some client protection in place that could act in your favor. I guess it will be to your disadvantage, if this trade occurred before the MiFID financial directives implementation were officially in place.

 

[mr_put]

rwb - thanks for your input. it is a defence i am preparing, not an offence. i want to be ready for when they come after me, and come after me they will. they've only held off this long waiting for the FOS decision. that's given me time to get my ducks in a row from a legal second defence perspective, if the regulator didn't find in my favour.

re mifid - that kicked in in 2007, before i opened my account with IG, and before i incurred the losses that this dispute relates to, so there should be coverage there.

re "My experience is that IG happily break their own rules about margin when bets are either opened or closed" - that's the whole problem here, as far as IG's T&Cs go, they don't actually have to do anything, you're always left carrying the baby, whether you would've wanted your positions left open and had positive margin, or whether you would've wanted your positions closed and were 92k in the hole on a 5k credit account!

 

[Jack Hughes]

re "My experience is that IG happily break their own rules about margin when bets are either opened or closed" - that's the whole problem here, as far as IG's T&Cs go, they don't actually have to do anything, you're always left carrying the baby, whether you would've wanted your positions left open and had positive margin, or whether you would've wanted your positions closed and were 92k in the hole on a 5k credit account!

So far, SBs seem to have taken absolutely no notice of MiFID, and the FOS just spend six months messing around before they do anything. It would be great if someone did go through the courts and establish some proper rules, rather than having T&Cs that effectively allow spreadbet providers to make clients responsible for anything that goes wrong.

 

[Splitlink]

Seems to boil down to taking a large position and believing there was a duty on IGs part to close him out before he lost too much. IG did not believe they had such a duty. Interesting that this thread is about not being closed out while there's another thread attacking IG for closing someone out.

This seems to be black and white to me, I'm afraid. Either they had a duty, or they did not, to close you out on lack of sufficient margin or you had a duty to be absolutely sure of what you had signed in the way of margin requirements. I can't see any real argument here, so you had better be right.

I don't trade anywhere near the amount that you did and my SB company has said, very clearly, that I will be stopped out if my margin is insufficient. It makes sense for them.
Why should they look for trouble when , probably, the punter could never hope to settle an uncontrolled loss of that nature? Nevertheless, regardless of what they say, I make sure that I don't get into that kind of pickle. As if we didn't have enough to worry about!

Now, if their software was up the creek and you went over the top without their knowledge when, under normal circumstances, they would have stopped you. that is a matter where they might try to frighten you with litigation without any real intention of pursuing it through the courts. However, you are fighting a very big opponent and you should have known better.

Let this be a warning to everyone.

 

[Splitlink]

no, it was an index bet. it was £200 per point long on the ftse and it went against me - fair enough, but without monitoring the position i thought, fine i may lose my deposit, my credit limit at most, plus maybe a bit more, but not any more than that. but another 85k?! has anyone else heard of anything like this before? i came across this old article while researching my cause today:
IG Index flotationhit by credit dispute - Business News, Business - The Independent

£200 per point long on ftse is 5 points per £1000 which equals around 450 points! Are you completely new to trading, or what? The more I think of this, the more I believe that you should not be allowed out.

 

[tar]

£200 per point long on ftse is 5 points per £1000 which equals around 450 points! Are you completely new to trading, or what? The more I think of this, the more I believe that you should not be allowed out.

Check post # 22 i attached some screen shots shows that the margin req for this position was then = 40000 pounds , and he has only 2000 on his account plus 5000 credit limit , how he managed to open this bet !

 

[Splitlink]

Check post # 22 i attached some screen shots shows that the margin req for this position was then = 40000 pounds , and he has only 2000 on his account plus 5000 credit limit , how he managed to open this bet !

I see that this thread has been going since Nov. 2008 and I've only just latched on to it.
He could get away with it and I hope he does because, let's face it, IG can afford it and, morally, they should not have allowed that to happen, but he was incredibly imprudent to take that kind of a trade.

They could be waiting to make an offer but it will, still, be a lot of money.

 

[shadowninja]

Out of interest, if I had just £2k to my name, could I punt FTSE with the aim of making £50k or getting a margin call? (Or should I buy a ticket to Rio first?)

 

[Splitlink]

Out of interest, if I had just £2k to my name, could I punt FTSE with the aim of making £50k or getting a margin call? (Or should I buy a ticket to Rio first?)

I don't know. I've never made those kind of calculations!

 

[Jack Hughes]

Out of interest, if I had just £2k to my name, could I punt FTSE with the aim of making £50k or getting a margin call? (Or should I buy a ticket to Rio first?)

No problem, sir! ...A few years ago a position was magically opened in an account of mine that hadn't been used for months and had a balance of zero. So you might not need any margin or even have the bother of placing a bet. In fact, they're so helpful and generous that they'll almost certainly throw in a plane ticket and an expense account.

 

[gle101]

"My experience is that IG happily break their own rules about margin when bets are either opened or closed" - that's the whole problem here, as far as IG's T&Cs go, they don't actually have to do anything, you're always left carrying the baby, whether you would've wanted your positions left open and had positive margin, or whether you would've wanted your positions closed and were 92k in the hole on a 5k credit account!

Well, you have to take responsibility for your position. If there is a gap in the market you might lose more than what you have on your account. This is not a computer game, but real money that is at stake. Sorry mr_put, but there is just too much blaming IG in this case for not giving you a margin call. If you had a limited account (guaranteed not to lose more than what you had deposit) I would understand your situation. However, I think there is some hope for you anyway, in the fact of being an inexperienced trader, and the responsibility of the SB company to limit you losses according to the MiFID.

 

[mr_put]

"If you had a limited account (guaranteed not to lose more than what you had deposit) I would understand your situation" - wrong! another case of the IG small print. limited or standard accounts, as they were in 2008 anyway, meant only that you couldn't open bets on credit. you were still fully responsible for all losses, regardless of the fact that you thought you had no credit facility with IG. you actually effectively apply for credit in the basic application process.

e.g you have 5k in your standard / limited account, you open a bet within your account parameters, the bet goes massively wrong, you expect IG to have closed you out, you're still going to get the same email in the morning asking for 92k.

i found this out after my losses, going over the small print for the FOS and with the lawyers.

 

[tar]

"If you had a limited account (guaranteed not to lose more than what you had deposit) I would understand your situation" - wrong! another case of the IG small print. limited or standard accounts, as they were in 2008 anyway, meant only that you couldn't open bets on credit. you were still fully responsible for all losses, regardless of the fact that you thought you had no credit facility with IG. you actually effectively apply for credit in the basic application process.

e.g you have 5k in your standard / limited account, you open a bet within your account parameters, the bet goes massively wrong, you expect IG to have closed you out, you're still going to get the same email in the morning asking for 92k.

i found this out after my losses, going over the small print for the FOS and with the lawyers.

No not wrong , there is 3 types of accounts , limited , standard and credit , in limited account every bet will has a guaranteed stop attached to it , u cant open any bet without a guaranteed stop , in standard and credit accounts you r liable for all the losses even if it exceeds your initial deposit ...
You didnt understand my reply b4 , again how the court will know for sure you didnt know , you claim so , but maybe u r an experienced punter who wants a free fat bet and know exactly what he is doing , your case is not easy good luck .

 

[gle101]

"If you had a limited account (guaranteed not to lose more than what you had deposit) I would understand your situation" - wrong! another case of the IG small print. limited or standard accounts, as they were in 2008 anyway, meant only that you couldn't open bets on credit. you were still fully responsible for all losses, regardless of the fact that you thought you had no credit facility with IG. you actually effectively apply for credit in the basic application process.

e.g you have 5k in your standard / limited account, you open a bet within your account parameters, the bet goes massively wrong, you expect IG to have closed you out, you're still going to get the same email in the morning asking for 92k.

i found this out after my losses, going over the small print for the FOS and with the lawyers.

It is your responsibility to know the meaning of a standard and limited account according IG's specification. If there is a gap in the market you might be responsible for the loss regardless. I do understand you position and hope it will come to a solution that you can accept as being fair. There was a guy on another thread that had a bet for £2000 on the DAX, blaming the SB for opening the position in the first place, and closing it too early (he didn't lose any money). I guess you would have been extremely grateful if IG acted according to the later.

 

[mr_put]

hi tar,

"there is 3 types of accounts , limited , standard and credit" - that might well be the case now, but i was only aware of the standard and credit accounts in 2007/8.

in terms of how the courts will know whether i am an experienced punter or not - a simple credit check will show which spreadbetting companies have run credit checks on me in the last 7 years before offering me an account - 1, IG, and i believe they did that when i opened my first account with them (and in spreadbetting in general), which was the standard, not the later credit account.

 

[Jack Hughes]

Yes, I think IG's accounts changed a year or two back. There's something in the T&Cs that apparently gives them the right to take money from your account, which seems to be a type of credit agreement.

 

[gle101]

hi tar,

"there is 3 types of accounts , limited , standard and credit" - that might well be the case now, but i was only aware of the standard and credit accounts in 2007/8.

in terms of how the courts will know whether i am an experienced punter or not - a simple credit check will show which spreadbetting companies have run credit checks on me in the last 7 years before offering me an account - 1, IG, and i believe they did that when i opened my first account with them (and in spreadbetting in general), which was the standard, not the later credit account.

Did IG have a "limited" account in 2007/8?