Is IG Markets in breach of its AFSL by suspending or terminating the accounts of clients who lodge complaints?
Summary: As detailed in prior posts, I complained to the Australian Financial Complaints Authority (AFCA) about the unfair terms of IG Markets automated close-out process for margin calls (30min timeframe even when you're asleep) and that it isn't clearly explained to new clients. Indeed, its fine print actually asserts IG can close your position out instantaneously with the equivalent of a 1.25% adverse price move (75% equity on 20 to 1 leverage) and no margin call notification whatsoever!
IG suspended my account after I lodged my AFCA complaint and published my first blog post about it. The AFCA Ombudsman found they were not entitled to do so and it was likely in breach of their AFSL licence conditions. They required IG to pay me $500 for this unjustified suspension. Despite receiving this verdict, IG Markets then terminated my account! (Presumably thinking it was now safe from further scrutiny as the Ombudsman had finalised their decision.)
I have accepted IG Markets terms and conditions and done nothing whatsoever to breach them. It is not a breach of their terms to lodge a complaint or publish facts about it for the public to read. The AFCA has advised that as the initial complaint has been closed I need to lodge a new complaint about the termination. So that's what I'll be doing.
In this post I will be collating relevant details explaining why AFSL holders should not be allowed to suspend or terminate accounts of clients who lodge complaints and have not violated any term of their agreement. If Australian government and agency regulators allow this retaliatory practice it means more financial harm will be visited on Australians.
I established (to any objective person) in public blog posts that various IG Market terms are either "unfair, unreasonable, obscure or contradictory" and while the AFCA Ombudsman chose in my specific case not to overturn a decade of allowing such practice it simultaneously submitted to an ASIC investigation that CFD Providers should be banned from offering their products to retail clients and that the CFD industry is unfair (I will provide excerpts from their submission below.)
Thanks, in part, to complaints like mine, the CFD industry ended up getting its future profits significantly curtailed by ASIC (via product bans, huge leverage reductions, and client losses limited to funds in their account) due to the harm caused to Australians though ASIC didn't go far enough and I urge other Australians to contact me with their stories of financial harm.
1. The AFCA Ombudsman found suspending an account for complaining is not reasonable or entitled and is likely a breach of an Australian Financial Services Licensee's obligations.
Lodging an AFCA complaint is not an unauthorised activity
In the submissions to AFCA, the basis of the suspension is not identified with particularity. I do not consider that lodging an AFCA complaint about a specific margin call and close out provides the financial firm with a reasonable basis for exercising its discretion to suspend the account “in good faith according to what we reasonably believe to be fair in the circumstances”.
Finally, I note, as an Australian Financial Services Licensee, to comply with its financial services obligations, the financial firm is obliged to
• hold membership of the AFCA scheme
• provide its services efficiently, honestly and fairly, and
• engage with AFCA in a manner consistent with its obligations under the AFCA Rules.
Using the lodgement of a complaint (whether internally or to AFCA) as a basis for suspending a client’s account is not reasonable in these circumstances. It may also be a breach of one or more of the obligations listed above.
The financial firm was not entitled to suspend the account in these circumstances
For the above reasons, I am satisfied there was no basis for an account suspension as contemplated by the terms and conditions.