Upheld: incorrect client categorisation and inadequate regulatory assessment complaint against LMAX Broker Limited
Financial Ombudsman decision DRN-6350225 of 2026-05-11T00:00:00+00:00. incorrect client categorisation and inadequate regulatory assessment complaint against LMAX Broker Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6350225 |
|---|---|
| Decision date | 2026-05-11T00:00:00+00:00 |
| Firm | LMAX Broker Limited |
| Product | trading account / financial derivatives |
| Claim type | incorrect client categorisation and inadequate regulatory assessment |
| Outcome | Upheld |
| Remedy | LMAX Broker Limited must recalculate all trades Mr C placed while categorised as an elective professional client as if he had remained a retail client, applying the leverage and margin requirements available to retail clients. If the recalculated loss is lower than the actual loss incurred, LMAX must pay Mr C the difference. LMAX must ensure payment is made by an appropriate and accessible method. No award for distress and inconvenience was made, and no interest was awarded for loss of use of funds. |
Summary
Mr C complained that LMAX incorrectly reclassified him as an elective professional client in March 2021, allowing him to trade with significantly higher leverage than permitted for retail clients. Following discussions about margin restrictions, LMAX suggested professional classification and approved it based on Mr C's trading statements and tax documentation. Mr C subsequently incurred substantial losses in February 2022 during market volatility. The ombudsman upheld the complaint, finding that Mr C met only one of the three required quantitative criteria and that LMAX had not conducted an adequate assessment, particularly given Mr C's explicit statement that he had never worked in the financial sector. LMAX was ordered to recalculate Mr C's trades as if he had remained a retail client and compensate him for the difference in losses attributable to the excessive leverage.
The Ombudsman's reasoning
The ombudsman found that Mr C met only one of the three required quantitative criteria (trading frequency) but failed to meet the portfolio threshold and the financial sector employment requirement. While Mr C had experience trading his own account, this does not constitute working in a professional position within the financial sector as required by COBS rules. The ombudsman also found that LMAX's qualitative assessment was insufficiently substantive, relying primarily on trading history without adequate structured evaluation. The context in which professional classification was raised (addressing margin restrictions) and Mr C's expressed reservations further supported the conclusion that reclassification was inappropriate.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| LMAX Broker Limited, all decisions | 4 | 50% |
Source
Read the original decision on the Financial Ombudsman Service website