Not upheld: Investment mis-selling complaint against Trading 212 UK Limited

Decision detail

Summary

Mr S complained that Trading 212 failed to prevent a 30% US withholding tax deduction from his dividend payment on a US-listed company held within his Stocks and Shares ISA, believing his UK residency and ISA status would protect him. He also complained that he was not informed of the withholding tax in advance and only received the W-8BEN form on the dividend payment date, preventing him from submitting it earlier to claim a reduced 15% treaty rate. Trading 212 rejected the complaint, explaining that ISAs do not protect against foreign withholding taxes, that a W-8BEN form was in place (though not completed with the treaty reduction), and that as an execution-only broker they were not obliged to provide tax advice. The FOS Investigator and Ombudsman both found the complaint not upheld, determining that Trading 212's terms and conditions clearly disclosed withholding tax applicability, the firm had no obligation to provide tax information or advice, and the responsibility for completing the W-8BEN form correctly rested with Mr S.

The Ombudsman's reasoning

The ombudsman found that Trading 212, as an execution-only broker, had limited responsibilities: to provide clear information about withholding tax and ensure necessary documentation was completed. The firm's terms and conditions clearly stated withholding tax could apply and made no mention of ISA protection from foreign taxes. A W-8BEN form was in place at the time of the dividend payment, though it did not include the tax treaty reduction section—an innocent mistake by Mr S for which Trading 212 could not be held responsible. As an execution-only broker, Trading 212 was not obliged to provide tax advice, recommend form options, explain tax implications, or display tax information on their platform. The ombudsman concluded that different individuals with different tax statuses would have different applicable tax rates, making it unreasonable to expect the platform to display personalized tax information.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website