Upheld: Poor service and delays in ISA transfer processing complaint against XTB Limited

Decision detail

Summary

Mr S complained about XTB Limited's poor handling of ISA transfers totalling £288,000 from two other providers. XTB conducted source of funds verification on the £270,000 transfer from T, causing a 69-day delay until 31 July 2025, and failed to follow up with provider C for nearly three months after the initial transfer request was sent without the required form. Mr S cancelled the intended transfer from C due to uncertainty and delays. XTB initially offered £50 compensation plus calculated interest loss. The ombudsman upheld the complaint, finding the delays were primarily XTB's fault, and increased compensation to £250 plus £2,369.73 in calculated interest, while confirming the source of funds verification itself was a reasonable regulatory requirement.

The Ombudsman's reasoning

The ombudsman found that while XTB's decision to conduct source of funds verification was reasonable and compliant with Anti-Money Laundering Regulations, the execution was poor. The major delays were caused by XTB, particularly in obtaining legal advice and in failing to follow up with C for nearly three months. The ombudsman agreed that simple interest (not compound) was the correct approach for compensation. The ombudsman found XTB's initial £50 compensation inadequate given Mr S's anxiety about frozen funds and risk of losing tax-free status, and increased it to £150. An additional £100 was awarded for the poor service regarding the C transfer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website