Partially upheld: Investment mis-selling complaint against Capital Com (UK) Limited

Decision detail

Summary

Mr A opened a CFD trading account with Capital.com in January 2021 and traded 10 positions in fund K with 1:1 leverage (fully funded) in US dollars on a sterling account. In September 2022, Capital.com closed all positions when account equity fell to 49.9% due to running losses, resulting in a £4,880.22 loss. Mr A complained that positions should not have been closed as he had traded without leverage and that he was owed the full sales volume rather than the loss amount. The ombudsman found Capital.com acted fairly in closing the positions in accordance with the margin close-out rules in the customer agreement, but upheld the complaint regarding incorrect information provided in February 2021 stating margin rules would not apply to 1:1 leverage trades, awarding £150 compensation for distress and inconvenience.

The Ombudsman's reasoning

Although Mr A traded with 1:1 leverage (fully funded positions), his trading account with Capital.com allowed leverage trading, meaning he remained subject to the firm's margin close-out rules as set out in the customer agreement. The 50% margin close-out rule is a standard practice aligned with ESMA requirements and applies to derivative trading accounts generally. Capital.com acted fairly in closing the positions when account equity fell below 50% of the margin requirement, particularly as Mr A was given correct information on 29 August 2022 that he could deposit more funds to prevent closure. However, Capital.com provided incorrect information on 26 February 2021 stating that margin rules would not apply to 1:1 leverage trades, which caused Mr A distress and inconvenience, warranting compensation of £150.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website