The Financial Services Complaints Ltd (FSCL), New Zealand’s dispute resolution body, has reversed its course in an initial ruling with financial services provider, CMC Markets, having now ruled against the trading venue.
UK-based CMC Markets, a provider of foreign exchange (FX) and contracts-for-difference (CFD) products, like many brokers and providers, came under fire for its handling of its trades during the upheaval wrought by the Swiss National Bank’s (SNB) decision in January 2015. In this instance, CMC’s New Zealand arm originally was absolved of any wrongdoing, as the FSCL ruled that CMC Markets did not in fact act irresponsibly or adjust its trades during the CHF flux.
However, the FSCL has pivoted off this initial decision, instead ruling against CMC Markets, decreeing that the group had unreasonably adjusted the trades of one client during this period.
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The decision formally reverses last October’s ruling, resulting in CMC Markets awarding approximately $5000 to a client in New Zealand. By extension, a formal recommendation from Britain’s Financial Ombudsman (FOS) in October 2015 had ruled against CMC Markets clients, though the group has since offered refunds to the relevant parties.
While the sum of $5000 is hardly groundbreaking, the ruling is yet another reminder of the freshness of the wounds inflicted on the foreign exchange industry following the CHF crisis, which irreversibly changed the industry.
The FSCL acts as an intermediary and dispute resolution entity for brokers, non-bank lenders, and other various finance companies in New Zealand. The group also provides an alternative to legal proceedings for resolving financial services disputes.