Upheld: Investment mis-selling complaint against Capital Com (UK) Limited
Financial Ombudsman decision DRN-4667059 of 2024-03-07T00:00:00+00:00. Investment mis-selling complaint against Capital Com (UK) Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-4667059 |
|---|---|
| Decision date | 2024-03-07T00:00:00+00:00 |
| Firm | Capital Com (UK) Limited |
| Product | Investment |
| Claim type | Investment mis-selling |
| Outcome | Upheld |
| Remedy | Capital Com (UK) Limited must: (1) Calculate total capital deposits lost by Mr P in the trading account; (2) Deduct any withdrawn trading profits retained by Mr P; (3) Add any unreturned remainder capital; (4) Calculate interest at 8% simple per annum from when each capital loss occurred (or from the last date of losses if B applies) to the date of settlement; (5) Pay Mr P the total capital loss plus interest; (6) Pay Mr P £300 for trouble and upset caused. |
Summary
Mr P complained that Capital Com (UK) Limited inappropriately granted him a CFD and spread-betting trading account in January 2021 despite his complete lack of trading experience, CFD knowledge, secondary school education, and unemployed status with limited finances. Capital assessed the account as appropriate based on an appropriateness questionnaire, but the ombudsman found this assessment was flawed because Mr P could not meet two of the three key regulatory considerations (familiarity with the product and nature/volume/frequency of experience), and his education/profession could not compensate for his inexperience. The ombudsman upheld the complaint, finding the account should never have been granted, and ordered Capital to compensate Mr P for all capital losses incurred in the account plus 8% simple interest per annum, plus £300 for trouble and upset.
The Ombudsman's reasoning
The ombudsman found that CFDs are inherently complex and high-risk products covered by COBS 10 rules, which require firms to assess whether clients have sufficient knowledge and experience to understand the risks. Mr P's profile at onboarding—with zero trading experience, no CFD experience, secondary school education, and no relevant profession—meant he could not meet two of the three key considerations in the appropriateness rules. His education and profession could not compensate for his complete lack of knowledge and experience. The ombudsman distinguished between risk warnings (which merely disclose information) and appropriateness assessment (which must evaluate a client's actual understanding of risks based on familiarity, knowledge, experience, education, and profession). Mr P's early post-onboarding correspondence demonstrated his fundamental lack of understanding about basic CFD trading concepts, confirming the account was inappropriate from the outset.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Capital Com (UK) Limited, all decisions | 13 | 15% |
| Investment mis-selling, all decisions | 14,163 | 37% |
| Investment, all decisions | 14,180 | 34% |
Source
Read the original decision on the Financial Ombudsman Service website