Not upheld: Failure to conduct appropriateness testing and provide adequate risk disclosures for complex leveraged ETFs complaint against Trading 212 Limited

Decision detail

Summary

Mr H, an execution-only client of T212, complained that the firm failed to conduct appropriateness tests and provide adequate risk disclosures when he purchased leveraged and inverse ETFs, resulting in significant financial losses. T212 argued that Mr H was responsible for his own investment choices and that his trading history since 2020 demonstrated understanding of leverage products. The ombudsman found that although T212's formal appropriateness test only came into effect in early 2023 (after Mr H began trading in 2022), Mr H's prior experience with CFDs and leverage products, combined with his extensive trading history and the comprehensive risk information provided by T212 (including key information documents and multiple reminder emails), meant T212 met regulatory requirements. The complaint was not upheld and no remedy was directed.

The Ombudsman's reasoning

The ombudsman found that although T212's formal appropriateness test only came into effect in early 2023 (after Mr H began trading in 2022), Mr H's prior experience with leverage products and CFDs since 2020, combined with his extensive trading history of dozens of trades, would have satisfied appropriateness requirements. T212 provided comprehensive information including key information documents, multiple reminder emails about holding periods, and risk warnings that Mr H accepted before each trade. The ombudsman concluded Mr H was fully informed of the risks and made his investment decisions himself with reasonable information provided by T212.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website