Spreadex Limited · DRN-5910047

The complaint Mr W complains that Spreadex Limited allowed him to open a spread betting account which exposed him to the risk of losing more than he’d deposited. He says Spreadex should apply responsible gambling policies which don’t let bets be placed where there isn’t enough money to cover the potential loss. What happened Mr W opened a spread betting account with Spreadex on 16 July 2024. He traded for around ten days, and ended up with a negative balance of around -£5,000. Soon after, he complained. He said he was a vulnerable customer and had received some bad news which “put me into an irrational state of thinking which led me to making some very irrational decisions on my spreadex account”. He said Spreadex should have stopped him placing bets that could have led to him owing the firm money – he hadn’t applied for any kind of credit facility. Spreadex hadn’t checked to see if a credit facility was affordable. He said he couldn’t afford to pay the money back and that Spreadex should have prevented the situation arising. He said Spreadex’s sister firm (which I’ll call X) has measures to stop him betting more than he has in his account. Spreadex didn’t think it had done anything wrong. It explained that Mr W had a spread betting account, rather than a fixed odds account. So certain responsible gambling policies which applied to its fixed odds business didn’t apply here. It said Mr W could lose more than he deposited and that he’d been told about that risk. It said it hadn’t been aware of any sign of Mr W being vulnerable until he complained. But as a gesture of goodwill it said it was willing to halve Mr W’s debt. Mr W remained unhappy and came to our service. One of our investigators looked into things, and said: • Mr W had a spread betting account, not a fixed odds account. So it was subject to FCA rules, not Gambling Commission ones. • Spreadex had concluded the account was appropriate. • With a spread betting account, there’s no credit limit as such. But due to the leveraged nature of the product, losses can exceed deposits. And for sports spread bets that means a customer’s account can become negative and they owe money to the firm. • While Spreadex wasn’t obliged to assess affordability, it had conducted a credit check which gave no concern. • There had been nothing to alert Spreadex to a potential vulnerability until Mr W complained, when he’d already made his losses. • Overall he didn’t think Spreadex had done anything wrong.

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Mr W didn’t agree and asked for an ombudsman’s decision. He asked why different companies in the same group could have different rules and policies for responsible gambling. He also said he’d tried to set a deposit limit of £1,000 with Spreadex, but then he was allowed to run up a £5,000 debt. 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. Mr W complains about the measures Spreadex had in place to limit the risk and consequent loss that he was exposed to. The measures it had in place were driven by the type of account he had. Mr W had a sports spread betting account. Under the relevant rules (found in COBS 10) Spreadex had to ensure Mr W’s account was appropriate for him, which it did. It also had to warn him of the particular risks of this type of trading and this type of account. In order to open his account Mr W had to agree that he’d read and understood the Customer Agreement, Risk Warning Notice, and Sports Spread Betting Rulebook. Within the Risk Warning Notice it said: “If the underlying market movement is in your favour, you may achieve a good profit, but an equally small adverse market movement can not only quickly result in the loss of your entire deposit, but may also expose you to a large additional loss over and above your initial deposit. Spreadex will trade with you under a Sports Spread Betting and Fixed Odds Betting Customer Agreement. You should make sure that you have read this and are happy with its terms before you open any Spread Bets with Spreadex.” Before opening his account Mr W also agreed that he was aware that: "Regardless of whether or not you deal with us on credit, neither any credit or other limit set on your Account nor any sum of cash you have paid into or otherwise have standing to the credit of your Account puts any limit on your potential losses in respect of a Sports Spread Bet. Your financial liability to us may exceed the level of the credit or other limit on your Account. We refer you to the Risk Warning Notice. • Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. • You completed the Appropriateness test prior to the activation of spread betting on your account and confirmed that you: • Understood that spread betting involved a higher level of risk and that you can lose more than your original stake. • Understood that you could lose more than your initial deposit or balance on your account." By opening his account I’m satisfied Mr W was made reasonably aware that he was trading in a product whereby he was, with each bet, exposed to risks which exceeded his deposit or stake. And that he could lose more than the balance on his account. He was also aware that these losses could be suffered regardless of any credit or other limit he’d set on his account. I appreciate that Mr W has said Spreadex has related companies who restrict his ability to suffer losses in excess of his deposits. And he thinks Spreadex should do the same. But I think it’s important to note that both Spreadex and its related entities are governed by

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multiple regulators with separate rules. For firms like Spreadex which offer both fixed odds and spread betting, these products are regulated by distinct entities. Both Spreadex and its sister firm have their fixed odds business regulated by the Gambling Commission, and their spread betting by the FCA. While in different scenarios one regulator’s rules may provide more customer protection than the other, I can’t fairly criticise Spreadex for running its FCA regulated business in line with FCA rules. And I’ve seen nothing to suggest it breached those rules. Mr W has also said that he tried to limit his deposits to his Spreadex account. But as above, whatever deposit limits Mr W set, the nature of spread betting is such that he still stood to lose sums in excess of those deposits or the balance of his account, and he was warned of this risk. Mr W has explained that he was vulnerable and the losses he’s suffered here have caused him a lot of distress. I have a great deal of sympathy for Mr W, and I don’t doubt that he took what he thought were reasonable steps to manage his risk by dealing with regulated companies. But I’ve seen nothing to suggest Spreadex ought to have known Mr W was vulnerable or couldn’t afford to risk the money he’d lost. And I note that once Mr W made Spreadex aware of his situation, it closed his account and has offered to reduce the amount he owes. Overall while I have sympathy for the position Mr W is in and the debt he’s accrued with Spreadex, I don’t consider it to be a result of Spreadex failing to follow its regulatory obligations or otherwise treat Mr W unfairly. Firms offering different products – or even the same firm offering different products governed by different regulators’ rules are free to offer each distinct product in line with the relevant regulator’s guidelines. As I’m satisfied that Spreadex did so here, it follows that I don’t think it would be fair to require it to refund any of Mr W’s losses. My final decision For the reasons I’ve given I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr W to accept or reject my decision before 28 April 2026. Luke Gordon Ombudsman

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