When you are having trading platform issues – take action, fast!

Insights for consumers

A Contract for Difference (CFD) is a financial agreement between you (the trader) and a broker where you speculate on the difference in price of an asset, such as a stock, commodity, or currency pair, between the time you open a position and the time you close it.  You are betting on whether a price will go up or down, without actually owning the asset. 

CFDs are complex financial products that carry a high level of risk, meaning they are not a suitable investment for most consumers.

With the increased risk comes greater opportunity to make investment gains. The law requires all investment product risks to be clearly outlined in product disclosure statements (PDS) so that you can properly understand what you are investing in and what the risks are. This helps you understand your obligations and whether you can afford to take the investment risks.

If you are trading online, keep the provider’s contact details handy in case you experience problems with the trading platform or app. If they are in a different country, make sure you have the international contact number. If you cannot get through on the first attempt, keep trying.

Insights for trading platforms

It is best practice to provide clear contact details for clients, including those who may be overseas, especially during outages.

Tom was trading when the platform had an outage

Tom, an experienced trader, was using an investment platform provider’s app to trade CFDs. He was trading overseas when the platform became unavailable for about an hour. This meant that he could not complete his intended trades.

Tom tries contacting the provider

The platform displayed error messages advising clients to call the provider’s client management team for assistance. Tom tried calling the number provided but could not get through. He later explained that he only tried once, assuming the provider’s systems were down. Tom also sent messages to his dedicated account manager via WhatsApp as he usually would, but the manager was in New Zealand and asleep at the time. Tom later said that he knew that his account manager was based in New Zealand and there was a time difference.

Tom regains access to platform

Tom regained access to the platform after about an hour and continued trading using a friend’s device. Later that morning, he received a WhatsApp message from his account manager saying that he would help Tom sort it out on Monday morning.

Tom assumes message from account manager relieves him of risk

Tom says he relied on this message and did not take further steps to reduce his risk before markets closed. Over the weekend, the markets moved sharply. Following the opening of the markets on Monday, he lost approximately $380,000, because his account was liquidated since he did not have enough available equity to cover the margin requirements for the trades. Margin is the security required to be given by the investor to the platform provider to cover their exposure as a counterparty to the trades for the investor. Tom knew about the requirements to keep enough in his account to cover the margin.

Tom thought the provider should bear responsibility because the outage affected his ability to trade before the markets closed, and he complained to Financial Services Complaints Ltd (FSCL). As well as the large financial loss, he said that his mental health suffered due to this life-altering loss of money.

Tom argues for compensation

Tom said the provider should compensate him for his losses because the outage prevented him from making his intended trades, and the WhatsApp message from his dedicated account manager misled him. He also wanted an apology and a report explaining what happened.

Platform denies responsibility for the loss

Under the provider’s terms and conditions, they were not liable for outages caused by circumstances outside their control. The provider said their service was available through the client management team and Tom could have closed his positions after regaining access to the platform. The provider also said the WhatsApp message did not cause Tom’s loss because he was actively trading before he received the reply from his account manager.

FSCL finds platform not at fault

As per the provider’s terms and conditions, we agreed that the provider was not liable because the outage was out of their control. They had also provided a backup service, as users could contact their client management team.

There was no evidence that the client management team was unavailable during the outage. Tom only called the 0800 number once from overseas, which would never have connected. The international contact number was available on the platform provider’s website. So, it would be unfair to hold the provider responsible for Tom calling the wrong number and only trying once.

We also found that Tom’s statements about relying on the WhatsApp message were inconsistent. He traded for nearly two hours before receiving the message, and could have closed his positions before markets closed. We could not conclude that the message caused his loss.

We explained that we were sympathetic to Tom’s large financial loss, but it would not be fair to hold the platform provider responsible. The markets had moved suddenly, and Tom’s trading decisions put him at risk of a large financial loss. We recommended that Tom discontinue his complaint, and the case was closed.

* Names have been changed. Our case studies are brief summaries of our more detailed case notes from our investigations. For more information on this case, contact .