Trading 212 UK Limited · DRN-6264113

The complaint Mr J has complained that Trading 212 UK Limited (‘T212’) placed a trading break on his contracts for difference (‘CFD’) trading account. Mr J says this lost him more than £29,000. What happened Mr J had been trading with T212 since July 2024. On 25 February 2025 T212 implemented a five-day trading break on Mr J’s CFD account. This meant he couldn’t trade as he wanted or hedge his positions. He raised his concerns with T212. T212 issued its response to Mr J’s complaint on 28 February 2025. It said; • It had provided Mr J with information and warnings about the potential of trading breaks and any discrepancies between account activity and financial information that had been provided by its customers. • While it accepted it could be frustrating, it was acting to prevent foreseeable harm. • Mr J was able to add margin, but no adjustments could be made to open trades. • The trading break had been applied in accordance with its regulatory requirements. Unhappy with the outcome Mr J brought his complaint to the Financial Ombudsman Service. In brief, he told us T212 hadn’t advised him of a threshold or why it believed his deposits were inappropriate. He thought he should have been allowed to hedge his positions or adjust the stop loss/profit levels while the trading break was in place. After his initial assessment our investigator considered the subsequent correspondence and concluded the complaint should be upheld; • He agreed that a five-day trading break was needed in an effort to prevent further harm to Mr J, but the break didn’t stop Mr J from making significant deposits to maintain his margin for his open positions. • T212 had provided Mr J with eleven warnings because of the level of triggers T212 saw as harmful but it seemed wrong to provide that argument to justify the break while maintaining the view that subsequent deposits weren’t indicative of Mr J escalating his potential future losses. • The trading break was put in place to limit the potential of escalating losses but led directly to the opposite taking place. • When Mr J made further deposits, he substantially increased the capital at risk of those losses. The trading break likely led to an outcome which T212 didn’t intend as the break didn’t lower the risk of loss to Mr J but increased it. • He said T212 should refund Mr J’s deposits when the trading break was in place, plus 8% interest and pay £200 for the distress and inconvenience caused. T212 didn’t agree. It said;

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• Allowing Mr J to add margin was a mechanism for him to keep his existing positions open if he wished and he was under no obligation to do so, but it didn’t undermine the restrictions placed on his trading. Adding margin was part and parcel of CFD trading. • On the balance of probabilities had the trading break not been put in place Mr J wouldn’t have acted differently as when the restriction was lifted Mr J’s account activity was such that he rose to T212’s next level within its vulnerability framework and his account was indefinitely restricted. • A suggestion that clients shouldn’t be allowed to make deposits during a trading break was more likely to force customers to crystallise a loss when markets moved against them when T212’s controls, while preventing them from opening new positions, allowed customers the freedom of choice to maintain their margin or otherwise. • Any changes made to Mr J’s personal financial details wouldn’t impact an already in place trading break but only in the future. • It referred to a previous decision where the ombudsman had concluded a customer could suffer financial harm if they weren’t able to add further margin during a trading break. • In summary, it didn’t accept the investigator’s assessment and adding margin allowed its customer a degree of control over their account during a trading break. Its restrictions prevented customers from opening new positions but prohibiting deposits was more likely to lead to the activation of a negative balance mechanism and the crystallisation of losses the customer may not have wanted to occur. • There was an element of benefit of hindsight in the investigator’s assessment when it came to how the market actually moved, because if it was assumed that hedging was allowed and the particular position recovered, the funds committed to the hedged position would have moved against Mr J. So, it wasn’t equitable to suggest hedging should be permitted but margin maintenance shouldn’t be. T212 requested the complaint be decided by an ombudsman so it was passed to me. Mr J provided his comments for my consideration as he didn’t believe the proposed redress fully reflected his losses. He said the five-day trading break was applied with good intentions, but the outcome was harmful and contrary to its purpose. He was prevented from hedging while he was exposed to leveraged trades but was allowed to make further deposits to maintain his margin to avoid liquidation of open positions he was no longer able to effectively manage. He said the losses were foreseeable and the restriction led to an increase in the capital at risk which established a causal link between T212’s actions and his losses. The policy decision wasn’t neutral as he had to add further funds under conditions of distress and restriction. Limiting redress to the return of post break deposits risked leaving Mr J materially undercompensated for the losses that arose because of T212’s flawed intervention and the foreseeable consequences. As the complaint remained unresolved, it was passed to me for a decision. I was thinking of reaching a different conclusion than the investigator so issued a provisional decision to allow the parties to provide me with anything further for me to consider before I issued my final decision. Here’s what I said; ‘I’d like to take this opportunity to explain that I fully understand Mr J’s strength of feeling about his complaint, and I sympathise with the financial impact his trading losses with T212 have had on him. However, when looking at the circumstances

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surrounding Mr J’s complaint, my role is to be impartial and consider what’s fair and reasonable. This means taking into account T212’s role, its obligations as set out by the Financial Conduct Authority (‘FCA’), but also the nature of the service it offered which involve a high-risk leveraged form of trading. Was T212 fair and reasonable in placing a trading break on Mr J’s account The FCA has rules that apply to CFD businesses and who those businesses allow to trade. As part of those rules firms are required to obtain information about a customer’s knowledge and experience that allows it to assess whether a product or service is appropriate for the customer – the appropriateness test. So, when Mr J opened his account with T212 he had to answer questions about his financial circumstances, knowledge and experience. This is to ensure that Mr J – as a retail investor – had the knowledge and experience to understand the high risks, leverage and complex nature of CFDs. In response to the appropriateness questions asked Mr J said; • His annual income was between £100,000 and £199,000. • He had savings of between £100,000 and £199,000. • The expected origin and destination of incoming and outgoing funds was Mr J’s credit/debit card. • His expected yearly turnover was between £50,000 and £99,000. • Mr J was employed full time at ‘director, owner or controller’ level in social services. This information also allowed T212 to establish what levels of trading etc would apply to the account. And as T212’s threshold of the triggers are proportionate to the financial data given by the customer it told us Mr J had ‘higher-than-most thresholds – and essentially more freedom to trade’. Prior to the five-day trading break on 25 February 2025 Mr J was given 11 earlier warnings starting from September 2024. These warning notices ranged in the severity of their consequences which became more severe as time went on; • Notification that T212 had an obligation to check account activity for financial risk. Consideration would be given to a large number of deposits and or/trades for a short period of time and total deposits made, all fees and charges or potential loss on the account becoming a large proportion of Mr J’s savings. • The next level of warning was that T212 had noticed the above behaviour on the account and that Mr J should reconsider the activities. • After that a 24-hour trading break was applied to the account to give Mr J the opportunity to reconsider his activity and revisit the financial details for his account. This happened twice on 5 December 2024 and 18 February 2025. • As there were still tendencies in Mr J’s account activity that posed a financial risk, a five-day trading break was imposed – on 25 February 2025 so seven days after the most recent 24-hour trading break – which prevented Mr J from opening new positions. Mr J was advised to review his financial activity/details and if the patterns persisted an indefinite trading restriction would be applied. • After the five-day trading break was lifted T212 considered the pattern

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persisted and an indefinite break was imposed on Mr J’s account in March 2025. In bringing his complaint Mr J told us T212 failed to provide him with any specific information about what amount of deposit exceeded his declared income, savings or intended investment. He said none of his deposits exceeded his savings and the platform provided no stipulations about a maximum deposit limit or any conditions. When he reviewed his trading activity he couldn’t find he was at fault. He said the restrictions were broadly applied which caused unnecessary confusion and had financial consequences. T212 has provided evidence of Mr J’s trades breaching its triggers and I asked for more information about this. It detailed the triggers it uses that can identify a customer as potentially vulnerable and explained once the triggers were breached more than a certain number of times within a set short period its system started recording those triggers. If those triggers were continuously hit over a following set period the customer would move further up its vulnerable customer scale and which could lead to either a 24-hour break, a five-day break or ultimately an indefinite break. But if the triggers were to reduce – after the excessive number of breaches had been identified – then the customer would move down the vulnerable customer scale. T212 told us that while its previous two interventions – the 24-hour breaks – had a positive effect and led to reductions in Mr J’s vulnerability rating, the concerning behaviour repeatedly returned and escalated and Mr J breached two separate triggers three times within the monitoring cycle period so his potential vulnerability level increased and the five-day restriction was automatically activated. And that happened again after the five-day trading break when behaviours returned and escalated to T212’s highest level of vulnerability. In my opinion this is a reasonable method to measure and assess a customer’s trading activity. Clearly T212 has a regulatory obligation to monitor customer’s trading activity to look for potential vulnerabilities such as gambling or a customer financially overreaching themselves by taking more risk and incurring losses in the process as examples. I should stress I am not making a finding that that is the case here. In Mr J’s case, T212 told us he breached the Excessive Daily Trades and Excessive Spreads/Fees and so was; ‘trading excessively whereby a disproportionate proportion of expected gains from the product is lost to spreads, fees or FX costs.’ My reading of the above is that T212’s automated due diligence system assessed the way Mr J was trading CFDs was costing him too much in spreads, fees, or FX conversion. And even if the market was moving in Mr J’s favour, T212’s risk model concluded the trades he was placing had an expected negative value after costs. So, T212’s risk model extended beyond the headlines of the warning notices of deposit exceeding income etc which is what Mr J has referred to in bringing his complaint. I accept that the warning notices didn’t give explicit guidance about what action Mr J should take other than revisit his financial activity or review his financial details. And I appreciate this must have been frustrating for Mr J. He wanted to carry on trading and needed guidance from T212 about how to be able to do so without exceeding T212’s triggers and subsequent restrictions.

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But equally I appreciate that T212 will not want to be too prescriptive or provide too much detail to its customers about its risk model and what the triggers are that will cause warning notices to be sent or T212’s intervention. However, I don’t find this to be unreasonable and accept it is done to prevent customers circumventing those triggers in order to carry on trading where T212 would otherwise recognise that trading may potentially be harmful to the customer. And I also accept that T212’s risk model is proprietary and if made public customers could change their behaviour to manipulate the outcome leading to what otherwise would have identified as foreseeable harm. But T212 has shared some information with this Service – which I can consider in confidence – and it has detailed the triggers that cause its intervention where a disproportionate proportion of expected gains from the product is lost to costs. After consideration, I don’t find its monitoring matrix to be unfair or unreasonable. And it’s not for this service to tell a firm how it should run its business – its own acceptable level of risk, thresholds, restrictions etc – as that is its own commercial decision. My role is to assess the fair application of T212’s risk control policies and management framework and not to question the validity of the risk control thresholds. But I can consider the impact of T212’s decisions on Mr J bearing in mind T212’s regulatory obligations and its need to intervene at some point if appropriate. Impact of the trading break The trading breaking came into force at midday GMT on 25 February 2025. After that the only activity that occurred on Mr J’s account – with the exception of the addition of margin – was the closure on 26 February 2025 of a position Mr J opened on 24 February 2025. While Mr J was able to add margin, amend his stop losses and take-profits during the break his complaint is that he wasn’t allowed to hedge the positions that were already open ie take a second, opposite position to protect against short term volatility. To my mind the intention of the trading break imposed by T212 is that it was brief and temporary with the assumption that Mr J would continue trading as he wanted in the normal way after it was over. So, the decision to allow Mr J to retain and maintain his open positions by adding margin was a reasonable one. But overall, the purpose of the trading break was at least in part to stop Mr J trading so much, so restricting trades seems fair. But if T212 allowed Mr J to hedge during a trading break these would be new trades and it was this behaviour T212 was restricting so I think its decision was fair. I accept that the purpose and effect of a given hedge trade is to reduce the market risk of a given position. But Mr J could have achieved the same outcome by closing part or all of a given position – which he could still do during the trading break – and reopened it after the break was lifted. I accept Mr J wanted to manage risk by dipping in and out, but to my mind this is the behaviour that had concerned T212. I say this because by placing trades on and off is going to accumulate fees etc – which is what caused the trading break – so in the circumstances I don’t find it to be unfair of T212 to have restricted the account in the way that it did.

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However, Mr J did manage to prevent his positions being closed and I can see that on 25 February 2025 Mr J added £12,000 to his account. He also added a further £3,000 on 10 March 2025 but this was after the trading break was lifted on 3 March 2025 when I assume Mr J was able to hedge his positions again if he wanted to. I appreciate adding margin may not have been Mr J’s preferred trading style and I accept it still represented a risk by allowing Mr J to add funds to his account. But it still gave him agency over his account and usually at a lower cost than hedging. And adding margin did succeed in preventing any margin call during the five-day trading break and none of Mr J’s positions were closed as a result. I’m persuaded by T212’s reasons for allowing a customer to add margin during a trading break. The intention of the break isn’t to outright stop a customer from trading but rather to slow them down – a ‘cooling off’ measure – and I think it’s reasonable to assume the expectation of both parties is that the relationship will resume on the original terms after the trading break is finished. Therefore, T212 needs to have consideration about the fairness for its customers to maintain their open positions during that trading break by allowing them to still have agency – or the choice – to manage their existing positions by adding margin if necessary, or otherwise. Not allowing Mr J to add margin – if there was a margin call – would have meant a loss would have been crystallised whereas allowing him to add margin would have enabled him to protect his positions and prevent that loss. Clearly finding a balance is a difficult one and by allowing the addition of margin still represents a risk but it’s hard to see that any solution will be the perfect one in such circumstances when T212 was trying to protect a potentially vulnerable customer. T212 has a regulatory obligation to prevent foreseeable harm and seek good outcomes for its customers. And T212’s action in imposing a break is evidence of its concerns about the trading patterns/levels of a customer’s account and to my mind shows its good intentions in trying to prevent foreseeable harm. The behaviours identified could be an indication of a gambling addiction or other financial vulnerability, but I accept that by allowing a customer to add margin could be seen as foreseeable harm. There is a tension here that T212 needs to manage and in Mr J’s opinion T212’s actions hampered his ability to manage the risk effectively. However, as mentioned, in my opinion, the intention of a trading break isn’t for the customer to stop trading outright but for the customer to consider their trading patterns/levels etc. And T212 only has the obligation to be aware of the potential of customer financially vulnerability, and not to assume that in all cases. The trading break is intended as a pause in trading which is clearly different than if T212 were to close an account outright because of, say, financial vulnerability. However, I do accept that by allowing a customer to add more margin when the account is in ‘close only’ can potentially further increase potential losses or expose a customer to more risk. But I think that misses the point which is that after the trading break both parties will resume the trading relationship and inevitably that exposes the customer again to considerable losses. But that has always been the basis of the relationship. Mr J has said his trading strategy relied on opening hedging positions based on market fluctuations and I accept he couldn’t trade as he wanted to. However, considering the levels of potential risk a customer can be exposed to during a trading break I don’t find that T212’s reasons for allowing a customer to deposit further funds for margin purposes – rather than the risk of not allowing for additional margin – but

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not to open new positions are unfair or unreasonable. Generally, the addition of more margin would expose the customer to less financial risk than hedging while still giving the customer a level of autonomy over their account pending the lifting of the trading break. I don’t think T212 acted unfairly or unreasonably by imposing the five-day break and not allowing Mr J to open new hedging positions. T212’s automated system acted as intended and I haven’t seen anything to suggest that similar wouldn’t have been to applied to all T212’s customers in similar circumstances. T212 had an obligation to act as it did if it concluded Mr J was potentially vulnerable. The FCA issued FG21/1 Guidance for firms on the fair treatment of vulnerable customers which outlines how firms should treat vulnerable and potentially vulnerable customers. The guidance set out expectations of firms and how they should identify and treat vulnerable customers. It was published to help ensure vulnerable customers receive the appropriate degree of protection and to experience outcomes that are in line with the outcomes received by other customers who may not be vulnerable and I don’t find that T212 has acted outside of those guidelines. Overall, I’m persuaded T212 hasn’t been unfair in its treatment of Mr J. He repeatedly breached the thresholds T212 set – which it has the discretion to do – and his account was restricted as a result. In the run up to the five-day trading break T212 has provided evidence Mr J breached excessive daily trades and excessive spreads/fee and T212’s trigger matrix identified there was a disproportionate proportion of expected gains from the product would be lost to spreads, fees or FX costs.’ I concluded by saying I wasn’t persuaded that T212 had done anything wrong, so I provisionally didn’t uphold the complaint. In response, T212 had nothing further to add. Mr J didn’t agree and maintained that T212 acted irresponsibility and with systematic incoherence. He said; • T212’s concern about his financial vulnerability wasn’t genuine. It sent him more than 100 automated ‘Margin call – Deposit funds to maintain your open positions’ notifications when it had simultaneously suspended the tools required to manage those positions. Its manner was predatory rather than protective. • He had been denied fundamental risk management tools and his account was effectively immobilised. By denying him stop loss there was no protection and it was financial sabotage. And by not allowing him to hedge his positions he could only either accept permanent loss or head towards a margin call. He couldn’t use standard market strategies to neutralize his position so forced a loss that was otherwise avoidable. • T212 never provided clarification of defined limits which violated the FCA’s requirement for it to be clear, fair and not misleading in its communications. T212’s assessment was an arbitrary algorithm which failed to account for his actual financial capacity. • He had warned T212 that its actions were putting him at risk but all he was told was that the ‘checks cannot be disabled’. Such a response was a violation of Consumer Duty and good outcomes. • T212 prioritised its internal compliance algorithms over the financial safety of his capital. It accepted his deposits and benefited from fees and margin but stripped him

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of the tools to defend his capital. • I had failed to accept the compelling reason why the complaint was initially upheld in that the break didn’t lower the risk of loss but increased it. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. After doing so, I remain of the same conclusion I reached in my provisional decision. I’ll explain why. Mr J disputes whether T212’s concern for his financial vulnerability was genuine as evidenced by the many automated margin call emails he received during the trading break. He said it was indefensible to argue that a client’s deposits posed foreseeable harm while soliciting further capital to maintain open positions. But in those notifications being sent, the account was being operated as I would expect to see by allowing Mr J the opportunity to add more margin to protect his open positions while the trading break was in place. By not sending those notifications would have denied Mr J the option of adding additional margin if he was otherwise unaware of the need. Mr J has said that T212 stripped him of the tools he needed to defend his account and that not allowing him to hedge his positions forced him to either accept permanent loss or head towards a margin call. I accept that hedging was a strategy used by Mr J and was one he wanted to use during the trading break. And I appreciate hedging can reduce risk by opening an opposing position while adding margin increases safety by providing more collateral. But hedging constitutes a new, active trading decision that could have potentially complicated Mr J’s risk exposure whereas adding margin merely increases the collateral for existing, already-approved risks. And adding a hedging trade is materially the same in terms of market exposure as reducing the size of a position. So, Mr J could have done the latter, and reopened positions after the trading break, and this would have been identical to adding a hedging trade and then removing it later. Overall, I’m persuaded by T212’s decision to restrict hedging while allowing margin additions during a trading break because it was managing risk according to regulatory requirements. However, I do appreciate Mr J’s complete frustration with the situation and which he communicated to T212 during the trading break. But as outlined in my provisional decision there is a tension here that T212 must manage in protecting its customer from potential foreseeable harm – in line with its regulatory obligations – and with the expectation that after the trading break the relationship will resume on the same terms as prior to the imposed trading break. Placing a trading break on an account and not allowing it to function as it usually would, isn’t an ideal solution as evidenced by Mr J’s dissatisfaction and no doubt he considers it to be a blunt instrument. But allowing Mr J to add margin did allow him some authority over his account during the trading break by increasing the safety. Mr J said that T212 repeatedly waited for him to enter a new CFD position to put the restriction on his account and not when he was without any positions. But it was only when Mr J was trading that T212 was in the position to monitor Mr J’s behaviour – and potential vulnerability – as it wasn’t something that could be assessed when the account wasn’t being traded. So, it’s logical that a restriction would only be placed on the account after an action was taken by Mr J rather than inaction.

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Mr J has said his account was effectively immobilised during the break as he wasn’t able to amend his stop loss orders on his CFD calls which was a primary safety mechanism. But I previously asked T212 about this and it confirmed Mr J could amend his stop losses and take-profits during the trading break and I haven’t seen any evidence Mr J was unable to amend his stop losses. To my mind this is fair and reasonable as it allowed Mr J to manage his existing positions. Mr J says the foreseeable harm came about because of the trading break and T212 prioritised its internal compliance over the financial safety of his capital, benefited from fees and margin and didn’t account for his actual financial capacity. But I disagree. Once T212 considered Mr J may have been financially vulnerable it had no choice but to take action – it had a regulatory obligation to do so. While Mr J disagrees with the algorithm and T212’s method of assessment it wouldn’t be fair for me to conclude T212 wasn’t acting reasonably when it was the same system that was applied to all its customers. And T212’s assessment was that Mr J’s trading was costing him too much in spreads, fees, or FX conversion which is a different measure than an assessment of his financial circumstances in that his annual income and savings were declared as being £100,000 to £199,000. However, I do accept Mr J’s frustration that T212 wasn’t more prescriptive in defining the limits of deposits and trading frequency. But I explained in my provisional decision that I wouldn’t expect T212 to publicly provide detail around that. If it was to do so it could allow potentially vulnerable customers to understand how to circumvent T212’s ability to screen for vulnerable behaviours which was the opposite of what it was trying to achieve. Mr J said my provisional decision failed to provide a compelling reason why I didn’t agree with the initial assessment to uphold his complaint which had identified that T212’s protective measures caused damage to his account. But I’m persuaded that by placing a trading break on Mr J’s account was the least detrimental option and was a pragmatic decision taken to minimise a longer term impact. And in the meantime, Mr J did have the option of maintaining his positions by adding margin. In conclusion, I’m persuaded T212 acted in good faith in imposing the trade break and with the intention of protecting Mr J from his own trading behaviour. It follows that I don’t uphold Mr J’s complaint. No doubt he will be disappointed with the outcome, but I hope I have been able to explain how and why I have reached my decision. My final decision For the reasons given, I don’t uphold Mr J’s complaint about Trading 212 UK Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr J to accept or reject my decision before 28 April 2026. Catherine Langley Ombudsman

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