IG Group (LON:IGG) will soon have to answer to the United Kingdom’s Financial Ombudsman for decisions it took during the SNB crisis that shocked the industry in January. In an interview with Reuters, the group’s interim chief executive, Peter Hetherington, revealed today that approximately fifteen clients have filed complaints against the brokerage with the British arbitration service.
The traders have accused IG of breaching UK regulations by acting out of self-interest rather than in favor of its clients in the immediate aftermath after the Swiss National Bank dropped the EUR/CHF floor. The group denies having done anything illegal and stands by its business practices.
Perhaps the most controversial Black Thursday step taken by IG at the time was to not forgive its clients’ negative balances. The group decided to pursue clients with demands to pay their debts and Hetherington has confirmed that less than eighty clients (out of 341) with outstanding disputes now remain. Despite the relatively small number of debtors, the group says it is still owed £15 million, implying that these are big players such as introducing brokers or hedge funds rather than simple retail traders.
New CFDs Now Available for SuperForex ClientsGo to article >>
Hetherington sounds confident that the UK Ombudsman will rule on the side of his group rather than that of its clients. He expects the adjudicator to give an opinion on the first case by Christmas and that most of the cases will be resolved by June 2016.
Hetherington was speaking in Dubai where IG officially launched its regional office today. He suggested that there is little room left for his firm’s further expansion, “For a while, IG has been about opening in new places and I think that road is nearly run.” He added however, that the group might approach the markets of Brazil or China if their legal environment changes.
Additionally, in case of the UK choosing to leave the European Union, the firm will explore other locations for its headquarters. Hetherington said, “Clearly if Britain were to leave, it wouldn’t be that taxing to get one of our other branches turned into a proper home. And the obvious ones would be Germany or France. But you have to ask what would the attitude of the remaining EU be to products like ours if the UK were to leave.”