Not upheld: account restrictions and closure; KYC/AML compliance; alleged deposit trap; alleged retaliatory termination complaint against Interactive Brokers (U.K.) Limited

Decision detail

Summary

Mr O complained that IBUK unfairly restricted his trading account and subsequently terminated his relationship after he failed to provide KYC documentation requested in December 2022. He claimed £16,000 in losses from missed trading opportunities and forced liquidation of shares at a loss. IBUK argued they were entitled to request documentation under regulatory KYC/AML obligations and to restrict the account when Mr O failed to comply. The ombudsman found that IBUK's documentation requests were lawful and necessary, that the account restrictions were properly applied under the terms and conditions, and that the subsequent termination was based on compliance considerations. The ombudsman rejected Mr O's claims of a deposit trap, retaliatory conduct, and defective notice, finding that the losses resulted from Mr O's failure to provide documentation and his decision to liquidate positions, not from any IBUK breach.

The Ombudsman's reasoning

The ombudsman found that IBUK's request for KYC documentation was lawful and necessary to comply with regulatory obligations under FCA rules. The terms and conditions clearly stated that failure to provide requested information would constitute an Event of Default allowing account restrictions. IBUK properly notified Mr O and his introducing broker of the consequences. The Closing Only restriction was appropriately applied after Mr O failed to provide documentation. The ombudsman rejected claims of a 'deposit trap' as closing-only status does not prevent deposits, and Mr O had been formally notified of the restriction's effect 16 months prior. The ombudsman found no evidence that the termination decision was retaliatory, as it was based on compliance considerations and Mr O's ongoing failure to meet mandatory verification requirements. The losses resulted from Mr O's decision to liquidate positions and market movements, not from any IBUK breach. Compliance with regulatory obligations does not breach Consumer Duty standards when detriment flows from the customer's non-engagement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website