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.

Details:

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.

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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.  

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If that is the case, then going one step further and terminating an account in this circumstance is also a breach of AFSL obligations.

It is also an egregious abuse of the AFCA complaints process to receive such a finding and then instead of correcting one's breach to exploit the fact that the complaint has ended to go even further in acting in bad faith and retaliation.

2. IG Markets continues its pattern of dishonesty and bad faith

In its response to my request to have my account unsuspended IG Markets wrote:

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It is our understanding that you fundamentally disagree with the terms of IG’s Margin Trading Customer Agreement which governs our relationship with you, and in light of this we believe that it is untenable for IG to continue offering our services to you. Please accept this email as formal notice of the closure of your IG account.

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This is pure fiction. I accept IG Markets terms and conditions and have done nothing whatsoever to breach them. I have never stated that I no longer accept being bound by their terms. (If I had IG Markets could just quote me rather than have to invent this "understanding.")

While being bound by IG's terms, it is still within my rights under Australian law to lodge complaints,  detail the unfairness of existing terms, and advocate for them to be made fairer and more clearly explained to new customers before they get burned.

This is precisely what the AFCA Ombudsman final determination was with regard to my account suspension ("lodging an AFCA complaint is not an unauthorised activity") and instead of IG Markets correcting its gross overreach it continues to act contrary to its AFSL obligations in framing complaints about the unfairness of its terms as a rejection of its terms.

IG Markets also stated in its response that:

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...should you continue to trade with IG and find yourself in a margin call, IG would seek to enforce the relevant terms of the Customer Agreement, which you have deemed to be ‘unfair’. It would therefore be untenable to continue offering our services to you.

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Untenable means not able to be defended or occupied. But IG Markets just did enforce its margin call terms on me despite my complaining they are unfair. So their position is not untenable, they are currently occupying it!

Again, IG Markets is trying to pretend that any complaint about its terms constitutes a rejection of them and somehow removes their ability to enforce them.

Once more, I refer them to the AFCA Ombudsman decision which they are legally bound to comply with:

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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.

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To be continued...