Mark Grogan v IG Index Ltd

The Claimant states that he is addicted to gambling. Prior to 2018, he had lost around £250,000 through gambling on on-line gaming platforms. In May 2018, he opened a spread betting account with the Defendant and, between then and January 2022, transferred just over £1.75 million into that account. In the same period, he lost in excess of £1 million, an average of over £24,600 per month.

The Defendant is a business that provides “investment services and products through different accounts” including spread betting and contracts for difference (Footnote: ¹). It is regulated by what is now known as the Financial Conduct Authority (“FCA”) (formerly the Financial Services Authority – “FSA”) pursuant to the Financial Services and Markets Act 2000 (“FSMA”). That regulation is contained in the FCA Handbook and in particular the Conduct of Business Sourcebook (“COBS”).

In summary, the Claimant complains that either the Defendant should not have opened an account for him at all or that it should have closed the account earlier than it in fact did. This complaint has three main elements:

The trial took place between 3 and 5 November 2025. For the purpose of the trial, I had a consolidated trial bundle containing case and costs management documents, orders and notices, statements of case and witness statements (including exhibits). Both parties served a ‘disclosure bundle’ containing the documents that they had disclosed in the proceedings. I had skeleton arguments and bundles of authorities.

Witness statements were served from:

The type of spread betting to which the Claimant’s account related involved financial instruments. In Quinn v IG Index Ltd [2018] EWHC 2478 (ChD), a case involving the same type of dealing with the same defendant, HHJ Pelling KC described the activity thus:

“Financial Spread Betting

3.

Financial spread betting is a bipartite contract for differences between a person wishing to bet ("bet placer") and a spread betting operator such as the defendant by which the bet placer can bet on the forward movement of securities, commodities, foreign currency values relative to other currencies or market indices by notionally "buying" or "selling" against a spread between a low fixed figure ("floor") and a high fixed figure ("ceiling"). If the bet placer "buys", he or she is betting that the relevant market will rise higher than the ceiling and if he or she "sells" that it will fall below the floor. The concepts of "buying" and "selling" when used in a spread betting context are artificial because in truth the bet placer does not buy or sell anything.

4.

How the bet is denominated depends on the subject of the bet. If what is being bet on is the movement of a share then typically the bet will be denominated in £x per penny (or cent) of share price movement upwards or downwards depending on whether the bet placer is buying or selling. If the bet placer is betting on the movement of a market index such as the FTSE 100 Index, the bet will typically be denominated in £x per point by which the index moves below the floor for a seller and above the ceiling for a buyer. If there is no movement then the bet placer will lose his initial bet.

5.

The defendant makes its profits by adding a margin to the spread. Mr. Murray explained the mechanism in his statement by an example:

If the client was being charged 15 basis points each way (i.e. 15 basis points on opening the trade and 15 basis points on closing the trade) that would be 30 basis points overall, which equals 0.3% of the total consideration of the underlying trades. Therefore, for example, if a client was buying 100,000 Vodafone shares, IG would charge 0.3% of the consideration of the position. The consideration of the position would be calculated as the number of shares multiplied by the share price so for example 100,000 multiplied by a share price of £1.80 would be 180,000. The commission in my example would be 0.3% of the consideration, so 0.3% multiplied by 180,000 would be £540.

Two consequences flow from this – first, the client is not betting against the service provider so that no conflict arises and secondly the service provider is paid whether the client wins or loses so the service provider has no interest in whether the client wins or loses other than that if the client wins he or she is likely to continue betting.

6.

This form of dealing has very serious downside risks for the bet placer. If the market concerned is for example the FTSE 100 Index, and it falls 100 points beneath the floor, a bet placer who is a buyer will be £100 worse off for every £1 per point of movement bet. If the bet is at £10 per point then the loss will be £1,000 and if the bet is £100 per point, the loss will be £10,000. Subject to closure of a bet, as to which see further below, the only cap on loss making is the relevant index or share or commodity price falling to nil.

7.

There are collateral advantages to spread betting on securities, which include not having to purchase the securities concerned thereby reducing the amount that has to be invested at the outset of a speculation (something that would otherwise operate as a restraint against over exposure) and not having to pay stamp duty on the purchase of the shares, because no shares are bought. No capital gain tax is payable on any profits made from spread betting.

8.

The gain or loss is crystallised when the bet is closed. This can happen in a variety of ways. The bet placer may agree with the spread bet operator to hold an open position for a fixed period of time. It may be that the bet placer wishes to take advantage of some gains that have been made while holding an open position or it may be that he or she enters into a stop loss arrangement with the spread betting operator concerned to the effect that the position will be closed in the event that there is an adverse move beyond pre-fixed parameters. Finally, spread betting operators reserve the right to close loss making positions where the losses exceed the proportion of loss covered by the bet placer's deposit and margin – something I refer to in more detail below.

9.

Spread betting operators in general will hedge, and the defendant in particular hedges, bets both internally and externally. In consequence the defendant argued and I accept that the bet placer placing spread bets with the defendant is not betting against the defendant thereby eliminating at least that potential conflict of interest between a bet placer and the defendant. Although the degree to which the defendant hedges bets placed with it was questioned in cross examination, in my judgment it is almost self evident that a spread bet operator will operate in this manner since otherwise it would be exposed to enormous and unsustainable risks. Although the defendant's witnesses implied that the defendant adopted a hedging programme in order to avoid a conflict of interest with its customers, in my judgment the predominant purpose was to avoid the commercial risks I referred to above. I also accept the point made on behalf of the defendant that the primary method of hedging is by notionally setting off bets by different bet placers betting in opposite directions in the same market and externally hedging any potential losses not covered by this method. This too makes obvious commercial sense since it minimises the defendant's costs of operating its hedging programme.

10.

The spread-betting operator will manage, and the defendant manages, its only real risk (that the bet placer will not be good for his or her losses) in part by requiring bet placers to deposit a relatively modest proportion (in the case of the defendant typically 10%) of his or her cumulative bet values (referred to either as a deposit or "margin") with the spread-betting operator and to require that the bet placer maintain that minimum sum on deposit by requests for additional margin (known as " margin calls") in respect of losses incurred by open positions. In default of a positive response to a margin call, the spread-betting operator will close some or all of the bet placer's positions in order to control its credit risk. In the case of the defendant, the degree to which a bet placer is permitted to suffer losses on open positions in excess of those covered by his or her current margin depends on the nature of the account maintained by the bet placer with the defendant. I refer to this in more detail below. The existence of this difference between margin and cumulative bet value leads the defendant to describe spread betting as " … betting using 'leverage' or 'gearing'… " – see the defendant's Risk Disclosure Notice referred to in more detail below. This is euphemistic. In reality, it means that the spread-betting operator is extending credit to the bet placer to enable him or her to bet. It is this factor together with the exponential nature of the losses that can be made from financial spread betting that makes it a high-risk activity. It is also why it is a regulated activity within the meaning of s.22 of FSMA (Footnote: ³).”

An agreement to engage in spread betting is an example of a contract for difference, that is to say a contract where one party agrees to pay the other the difference between the asset’s value at the start of the contract and its value at the end, the direction of payment depending on whether the asset value has increased or fallen during the contract. No physical transfer of ownership of the underlying assets occurs, and the trader simply speculates on the price movement in the asset value.

Within his witness statement, the Claimant described his history of gambling. He described his father as “a compulsive gambler and recalls being “gobsmacked” at the amounts that his father would stake in horseracing. The Claimant himself describes gambling on fruit machines (for example spending 95% of his holiday money, £150, in a fruit machine whilst on the ferry from Dover to Calais). He attended casinos, staking money using the so-called martingale strategy, by which, when the gambler suffers loss in a game where there are two choices and the chances of winning, they double the stake on the next gamble and carry on so doing until eventually they should (Footnote: ⁴) win an amount equal to all of their earlier losses plus the original stake.

He summarises his attitude to gambling with the comment, “The thing with gambling is, if you win, it’s “easy come, easy go” so you are more than prepared to gamble your winnings. And if you lose you chase your losses so for me it’s a NO WIN situation.” At paragraph 12 of his statement, the Claimant comments on a note in his file with the Defendant to the effect that he liked gambling. He describes himself as being “shocked” by this: “this could not be further from the truth. I hate gambling with a passion. I have a gambling disorder; there is a difference.” I shall return to the reference to him liking gambling.

In August 2011, the Claimant opened a gambling account with bet365. He states that he lost £256,000 in betting on football matches and horseracing over a period of 16 months, after which he stopped gambling for over five years.

In terms of his employment and wealth, the Claimant describes in his statement that he left school to work in a haberdashery warehouse and thereafter worked as a labourer on various building sites. He eventually obtained a job in telesales in which he appears to have been successful, been promoted to office manager then obtaining a job in a digital marketing company. He went on to open his own business in digital marketing. Alongside his paid employment, he developed and managed a property portfolio. He said he thought that, at the peak, he had owned 6 investment properties.

In cross examination, the Claimant described himself was someone who had been a millionaire but who now was in receipt of state benefits and “has nothing.”

The Claimant started spread betting with the Defendant in 2018. The application form, dated 30 May 2018 at DB64, states amongst other things:

The Claimant states within his witness statement that the bracket for annual income in the application form was £100,000-£499,000, and that he chose this bracket because his income was approximately £120,000 per annum. He also states that he selected the £50,000-£249,000 brackets for savings on the basis of savings of about £55,000.

The Claimant acknowledges that, in applying for a spread betting account with the Defendant, he was shown a Risk Disclosure Notice (DB32) which included the following statements:

Of the warning referred to at ‎[15.1] above, the Claimant in cross examination said that, whilst he had acknowledged reading it, that in fact no one would really do so.

The Claimant was required to undertake an appropriateness test. He took the test twice on 30 May 2018, failing the first time (see Appendix 1 below) and passing the second (see Appendix 2). The first test was taken at 17:44, the second at 17:48. As Mr Grogan pointed out in his evidence, he was scored at 60% (Footnote: ⁶) in the first test and 90% (Footnote: ⁷) in the second. The sixth question in the second test was the same as the first question in the first test. In the first test, he got it wrong but the score sheet not only states the correct answer but explains why it is correct.

In answer to questions about the test, Mr Sumpster said that the questions come from a random pool, covering at least 4 different topics. He accepted that it would be better if questions were not repeated, though he said there was no prohibition on the repetition of questions.

The original account opened by the Claimant was a “limited risk” account, on which the trading was limited to $100 per point.

On 21 June 2018, Ms Riley contacted the Claimant by email (DB246). She stated that she worked on the Defendant’s Premium Client Management Desk and had recently been given his details “due to the trading activity we are seeing on your account… I wanted to explain my role at I G and hopefully how I can help with your trading. I am part of premium desk and have a huge amount of news/data/research available via Bloomberg, Reuters and other tools used by hedge funds to pick stocks and gauge sentiment in market. I watch prices and monitor new specific to client requirements. I trade directly for clients to achieve execution sometimes unavailable on traditional platforms…” She indicated that it might be helpful if they spoke. The Claimant responded asking how he could increase his pound per point stake. He said that it was currently set at $100 (Footnote: ⁸). Ms Riley responded, “at the moment you are a ‘Limited Risk’ account meaning you have to have a guaranteed stop on all of your trades. If we look at something like GBP/USD, then the maximum amount £pp you can have with a stop at the same level is $100pp. After this, you need to space the stops at least 50 points apart. To get around this you can either look at upgrading the account to a normal ‘plus’ account meaning you are not required to have a guaranteed stop on all of your trades and hence will be able to place larger sizes online.”

In cross examination, Ms Riley was asked about the role of the Premium Client Management Desk. She said that clients would be referred to it by reference to the level of their trading, based on revenue value, which would be determined by a combination of the amount of trading activity and the size of trade. The client then would have a personalised service. The Defendant’s staff could not give trading advice but, as she put it, the staff would get to know the client, with particular relevance to their risk appetite and their financial background, what and how they like to trade and the best way to service that, by providing relevant information and assisting with trading activity.

She accepted that, although the Defendant was providing an execution only service, the Defendant nevertheless owed the Claimant a duty in respect of selling CFDs, in particular if he were a “vulnerable client,” defined in the Defendant’s Vulnerable Client policy as “a client who IG has grounds to believe is no longer appropriate to access derivative products and requires additional protection from accessing IG’s derivative products.” She noted that this definition was a little different from the definitions in the FCA’s Guidance for firms on the fair treatment of vulnerable customers, which refers to “vulnerable consumer” and “vulnerable customer” as a reference to “retail customers who are ‘natural persons’ and have characteristics of vulnerability.”

The change to a “plus” account took place on 29 June 2018. Whilst he had said in his witness statement that Ms Riley “recommended that I upgraded to the ‘plus’ account,” the Claimant, having heard a recording of the relevant phone call, accepted in cross examination that this was a change made at his request. The Claimant maintains that this change was important because the ‘Limited Risk’ account designation meant that there were crucial restrictions appropriate to a trader of the Claimant’s limited wealth, limited experience and limited knowledge. As was pointed out on the Claimant’s behalf, no appropriateness assessment or test took place in support of this change in designation, but thereafter the sums that he deposited increased significantly. Mr Sumpster said that, when there was a change of account, there would have needed to be a review of whether the client had sufficient knowledge and experience of the new account, though no quiz would be administered.

It is the Claimant’s case that, during July 2018, his trading was indicative of a gambling problem. Within his witness statement, he gives several examples, including:

In total, he asserts that, during the month of July 2018, he deposited £317,929.26 and withdrew £241,846.30. He describes himself as selling everything he owned to gamble, including the proceeds of sale of investment properties and a watch. He states that his trading was clearly simply gambling rather than strategic and was destined to fail. He asserts that the defendant should have been aware that his trading was a “recipe for disaster.”

On 2 July 2018, the Claimant applied to upgrade to a professional account. Ms Riley explained the difference between the retail and professional client in cross examination. To be considered a professional client under ESMA you need to have relevant funds and knowledge and to pass two of the requirements in terms of number of trades; knowledge and experience in the financial sector; and having at least €500,000 in available finance. As a professional client, the whole of the capital is at risk rather than there being an automatic stop on every trade. Ms Riley said that she did not encourage the Claimant to apply for his upgrade, though she did discuss it because it would have enabled him to improve his margins. She accepted that she was keen for him to upgrade because, though it involved greater risk of loss, there was also greater chance of gain. However, she said that the Claimant did not qualify by the Defendant’s rules because of the lack of funds and experience.

On 26 July 2018, the Claimant says that he was advised by Ms Riley to open an Australian CFD account. In cross examination, he described this as being something “orchestrated behind the scenes” by Ms Riley and something into which she had “coerced” him. He asserted that the opening of this account would have “circumvented the law.” I was unclear from the Claimant’s evidence as to why he was saying that this was “orchestrated” by Ms Riley or indeed why he felt “coerced” into opening it. The nearest I could find to evidence from the Claimant of some kind of nefarious action on Ms Riley’s part in respect of this account is the phone conversation of 13 September 2018 referred to below (which post-dates the opening of the account).

It would appear that an Australian CFD account was indeed opened on 30 July – an email of that date from Mr Grogan to the Defendant at DB352 states: “I have just opened a CFD account with yourselves because of the new European laws coming into affect today. What are the tax implications of trading in Australia???” The Defendant’s response was that the Claimant would need to ask a tax advisor about that issue and that the Defendant did not offer tax advisory services.

When Ms Riley was cross examined it was not put to her to that she had “orchestrated” the opening of the account or had “coerced” the Claimant into opening it. She was asked whether she was aware that Mr Grogan had wanted to open an Australian account and said that she could not remember whether this was the case.

On 28 August 2018, during a phone call with Ms Riley, the Claimant described himself as “a bit of a gambler.” This conversation is one of the examples that the Claimant relies on in support of his contention that the Defendant failed to discharge its protective duties towards him. It is one of many calls that were recorded and of which transcripts are available. The transcript of this call is annexed as Appendix 3, since its contents are relatively typical of the exchanges that were recorded and demonstrate matters that are relied on by each party.

Early on in the call, the Claimant refers to having “lost fifty grand like a few years ago.” He said in cross examination that this was “a lie – it was bravado.” He then went on to say that what he was talking about was money lost in a “demo account” – it would appear that some players in this industry, including the Defendant, operate “demo accounts” on which a customer can practice before venturing into the actual market.

On 29 August 2018, Ms Riley and the Claimant met at a restaurant in central Manchester. It was at this meeting that the comment “likes gambling” was recorded. The Claimant’s account of that meeting, in his statement at [38], is: “I specifically remember telling Ms Goldstein about my previous gambling history. I told her I had lost about £250,000 gambling with bet365. Her note after the meeting in reference to me says “likes gambling” which I vehemently disagree with.” In the Particulars of Claim at [33], it is stated that Ms Riley “plied” the Claimant with alcohol. During that meeting, he is said to have “orally disclosed to Ms Goldstein his addiction to gambling.”

The Claimant said of the meeting in cross examination that it was “implied” that he had an addiction. When asked about why the Particulars of Claim said that he had “orally disclosed” the addiction when in fact he was not asserting that the addiction was expressly referred to, he said that he had not written the document though he acknowledged that he had signed it. He said that, if he came across as liking gambling or being wealthy, that was simply bravado. He asserted in his oral evidence that the mention of being “a bit of a gambler” in the phone call on the previous day coupled with knowledge of the level of his losses should have caused Ms Riley in particular to realise that he had a gambling problem.

He maintained that champagne had been drunk by both of them, but that, on seeing the receipt, he remembered that he had bought the champagne, a single bottle. When asked why he had said that in the pleaded case that Ms Riley had paid for it, he said that this was something he had presumed to be the case. He accepted that it would not be right to say that she had “plied” him with champagne.

In her account of the meeting at [11] ff in her witness statement, Ms Riley says that the purpose of the meeting was, amongst other things, to explore the Claimant’s background and interests, as well as his trading strategy. She says:

“Mr Grogan made it clear to me that he was wealthy and that he enjoyed gambling as an interest. He also made it clear that he was a high roller who had enjoyed success in gambling was able to afford the losses he had suffered as well. As the meeting went on Mr Grogan boasted of his wealth and success and it appeared that he was trying to impress me… At no stage did Mr Grogan inform me that he had a gambling problem. It was clear from what he told me that gambling was something he enjoyed and could easily afford… The meeting in Manchester would have lasted no more than three hours. In his Particulars of Claim Mr Grogan states that I ‘plied him with champagne’. That is certainly not the case. I exhibit the receipt for the lunch which states that the bill for lunch was paid by 15.23 pm. The receipt also demonstrates that I had consumed two small glasses of wine whereas Mr Grogan had five Peroni draft beers. No champagne was purchased.”

Ms Riley said that she could not recall whether the Claimant had referred to a historic loss of £250,000 through betting with bet365. She confirmed her comment in her statement that he had referred to a history of gambling. She described her overall impression that the Claimant was someone who enjoyed gambling as a leisure activity and who was successful at it. When asked about whether he had spoken of incurring losses through gambling, she said that she could not recall that he had done so. It was not put to Ms Riley that the Claimant had said anything in the conversation which expressly disclosed either an addiction to gambling or the fact that he had suffered losses in doing so - indeed, it was not the Claimant’s oral evidence that he had said any of that.

When Ms Riley was cross-examined about drinking champagne (whether at her employer’s expense or at the expense of the Claimant), she said that she could not recall doing so.

Ms Riley was asked more generally about the possibility of the Claimant being classed as a professional client. She accepted that she was keen for this to happen because it would have reduced costs and given him the opportunity to make greater profits, though she accepted that it involved larger risk. However, after the meeting, it was recorded on the Claimant’s account that he did not have either the funds or the experience to make the professional classification appropriate so that was not progressed.

On 13 September 2018, the Claimant had a further call with Ms Riley which is of some significance and of which the transcript is annexed as Appendix 4. The context of the conversation was that new European Securities and Markets Authority (“ESMA”) rules affected the levels at which the Claimant could trade. In the conversation, the Claimant describes his account with the Defendant as his “secondary” account and alleges that he has two accounts because of the ESMA rules. In cross examination, he said that he did not have another account to which the account with the Defendant was secondary but that Ms Riley and he had agreed that he would take this call and give what was a rehearsed answer about having another account as a consequence of ESMA rules, and that he was saying what Ms Riley wanted him to say because he wanted preferential treatment from the Defendant. He was ambivalent as to whether it might be called “fraud” deliberately to say something that was untrue in order to assist one’s own position.

During re-examination, the Claimant said of this conversation that Ms Riley had asked him in advance of the call to do her a favour by responding to a survey that she had to do, blaming ESMA for restricting the level at which he could trade. This led to further questioning about whether he had any record of the conversation in which the supposed conversation with Ms Riley had taken place. He said that it would have been a communication using her personal number rather than her work number and that he could not trace records of the call because he had subsequently changed phone number, having lost the phone in December 2021.

Ms Riley denied that the purpose of this call was to encourage the Claimant to seek to evade the ESMA rules, though she accepted that the new ESMA rules restricted the margins on which the Claimant could trade. She said that it was possible but unlikely that Mr Grogan had her personal phone number. In any event, she denied coaching him about what to say relating to ESMA.

During the conversation, the Claimant answered a question from Ms Riley: “Sara: …what could encourage you more to make us your main provider? Is it just purely margins? Mark: You sleeping with me.” The Claimant described this comment as “a joke.” He accepted that he had met Ms Riley the following morning at a hotel and restaurant near the Defendant’s offices in London. Ms Riley said of this meeting (in her statement at [17]) that “I remember being sat at the bar having a coffee with Mr Grogan when I spilt part of my coffee over myself by accident. Mr Grogan reacted by making a comment along the lines of ‘I bet you love getting wet’, which was clearly meant as sexual innuendo.” When asked about this, the Claimant said that he did not recall an incident in which she had spilt coffee on herself and vehemently denied the comment about her loving getting wet. He asserted that this was “a disgusting comment” and said in cross examination that he would not be as vulgar as to speak to Ms Riley like this. He described Ms Riley’s account of the conversation as a “a lie” and “a ruse”, intended as an excuse for changing his account manager so that the Defendant would be able to say that it did not know what was happening on the account. As he put it in re-examination, “every time I had a serious loss they changed my account manager.”

Ms Riley agreed that shortly after this the Claimant was transferred to a different account manager. On 4 December 2018, the Claimant was contacted by a new account manager, Mr Will Thomson.

The Claimant states that his monthly net losses from November 2018 to January 2019 were:

In January 2019, the Claimant opened a new account, a so-called MetaTrader 4 (“MT4”) account.

On 7 February 2019, the Claimant says that he withdrew all of his funds, having had enough of his trading losses. However, on 22 February 2019, he (in his words) “relapsed”, depositing £45,000. He lost a further £69,000 in March 2019.

He states that, in April 2019, having completed a property transaction with his father as part of which his father transferred £86,000 to him, the Claimant deposited the £86,000 in its entirety with the Defendant. He states that this was his largest deposit to date and that took his total deposits beyond what the Defendants figures indicated he had access to. In March 2020, he sold a property in Reddish, receiving £72,454 and depositing £83,000 on the same day with the Defendant. In March 2021, he sold the property at 30 Denison Avenue, depositing £93,000 of the proceeds on the same day. In June 2021, he sold a villa in Spain and on the same day made two deposits with the Defendant, one for £99,999 and one for £35,001. In December 2021, he sold three buy to let properties and sent the proceeds to the Defendant.

Nevertheless, his deposits and his losses continued, with examples being losses in these months:

During his re-examination, the Claimant stated that he wanted the court to listen to the recording of a phone call on 31 March 2020. That transcript is annexed as Appendix 5 to this judgment. It involved a conversation with the account manager at that time, Ben Hough. The Claimant pointed out how upset he obviously was during that call.

The Claimant drew attention to an audit on 31 March 2021 where the Claimant’s savings are said to be £1.5 million. This is in contrast to the previous year where his savings are said to be £150,000. The Claimant’s case is that this increase in figures came from him including within his assets various aspects of his property holdings as referred to above. If this was correct and should have been obvious to the Defendant, it would follow that the Claimant’s pattern of depositing monies was indicative that he was selling those properties to raise assets.

On 12 January 2022, following a phone call between the Claimant and Ms Emma Mensah in the Defendant’s premium client team, his account was closed. In terms of the operation of the account, between 30 May 2018 and 12 January 2022, the Claimant asserts that he deposited sums totalling £1,751,731.37 into the spread betting account. This translated into losses of £1,082,511.74, equating to the average loss of £24,600 per month referred to above (Footnote: ⁹).

Mr Sumpster was asked whether the Claimant’s losses were indicative of him being vulnerable. He denied that this was so. He said that around two thirds of people who engage in spread betting with the Defendant lose money, so the losses themselves are not indicative of vulnerability. Further he asserted that the Claimant’s level and pattern of trading was not unusual or indicative of a compulsion to gamble.

During cross examination, the Claimant was asked about the extent to which he had discussed his alleged gambling addiction with others. He said he had not discussed it with his doctor or with his family. There were only two people with whom he had discussed it. He described himself as “a man’s man,” the implication being that he would not readily discuss private matters, especially ones that might be seen as evidence of weakness or failure, with others.

He was also asked about his General Practitioner’s medical records. It is unnecessary for the purpose of this judgment to go into detail about the content of those records, but they include reference to mental health issues. It was suggested that there were some inaccuracies within those medical records, for example as to the amount of his losses through gambling with the Defendant, the implication being that the Claimant has not been accurate in relating matters to his doctors. Whilst one can see some inconsistencies between what was recorded in those documents and the Claimant’s evidence before this court, I am not persuaded that the differences are any more than minor errors of recollection rather than a more general reflection on the Claimant’s reliability as a witness.

Ms Riley stated in cross examination that the Claimant never mentioned to her that trading was causing mental or physical health issues, that he was acting compulsively, that he was suffering more losses than he could afford or that he was borrowing to trade. Had he done so, she said that she would have closed the account. This is clearly consistent with the Claimant’s account that he did not discuss these issues.

As noted above, the regulatory regime for a business such as that of the Defendant is governed by the FCA (until 1 April 2013 known as the Financial Services Authority, “FSA”, to which some reference is made in the material before the court) and in particular COBS.

COBS 2.1.1 provides:

“(1)

A firm must act honestly, fairly and professionally in accordance with the best interests of its client (the client's best interests’ rule).

(2)

This rule applies:

(a)

in relation to designated investment business carried on for a retail client; and

(b)

in relation to MiFID, equivalent third country or optional exemption business, for any client.

(3)

For a management company, this rule applies in relation to any UCITS scheme or EEA UCITS scheme the firm manages.”

COBS 10A was introduced in 2018 as a result of MIFID II, which responded to concern about CFDs and spread betting. An FCA discussion paper of March 2025, dealing with appropriateness said at [11/5], “In a deliberate attempt to increase investor protection, MiFID II has restricted the types of products that are classified as ‘non-complex’.”

The provisions of COBS 10A included, at the relevant time:

The contractual framework included the Spread Betting Customer Agreement which noted the obligations under COBS in the introduction section at [7]:

“Nothing in this Agreement will exclude or restrict any duty or liability owed by us to you under the Act or the Applicable Regulations and these take precedence over the terms of this Agreement if there is any conflict between this Agreement and either the Act and/or the Applicable Regulations.

Section 2(1) records that the Defendant does not act as agent of the Claimant and that the Claimant will be treated as a Retail Customer. In section 2(4), the Customer Agreement indicates the services will be “non-advised”.

At section 2(10), the Customer Agreement includes the following:

“We offer different types of accounts with different features (for example different Margining procedures, different Margin rates, different betting limits and different risk protection features). Depending on your knowledge and experience and the type of Bets you generally place with us, some of these account types may not be available to you. We reserve the right to convert your account into a different account type if, acting reasonably, we determine that a different type of account is more appropriate for you, more appropriate in the market circumstances or our risk appetite changes in relation to offering that account type. We also reserve the right to change the features and eligibility criteria of our accounts at any time and we will provide prior notification of such changes on our website, by email or on one of our Electronic Betting Services.”

The Defendant provided a Risk Disclosure Notice. At section 10 it stated:

“APPROPRIATENESS

The majority of instruments in which you can invest through our Share dealing services are considered ‘non-complex’ and are not high risk financial products. However, because ETCs, Exchange Traded Notes and certain ETFs are considered high risk financial products, where we make these available to you we are required to make an assessment of whether these products are appropriate for you, and to warn you if, on the basis of the information you provide to us, that they are not appropriate. We will usually do this before you are able to invest in high risk products. Any decision to open an account and to use our products or services is yours. It is your responsibility to understand the risks involved with our products or services.

During our application process, we will ask you for information about your financial assets and earnings. We do not monitor on your behalf whether the amount of money you have sent to us or your profits or losses are consistent with that information. It is up to you to assess whether your financial resources are adequate for your financial activity with us and your risk appetite in the products and services you use.”

The Defendant adopted various policies in respect of the operation of its business, including a Vulnerability Policy, an Appropriateness Policy and a Wealth Policy.

The Vulnerability Policy provided that a “Vulnerable client” means “a client who IG has grounds to believe is no longer appropriate to access derivative products and requires additional protection from accessing IG’s derivative products.” It was noted that “This definition is not the same as the FCA’s definition, although overlaps may occur for example clients with mental health issues.”

Examples of vulnerability were said “to include a client mentioning that:

Within the Vulnerability Policy there is also reference to the Defendant performing ‘annual wealth checks’

“It should be noted that a client failing IG’s annual wealth checks would not fall under the scope of this policy, but instead should be treated in accordance with IG’s Wealth policy. If a client, irrespective of their declared wealth, were to say that they were losing more than they could afford and suffering as a result, this would suggest that they were a vulnerable client and so be grounds to close the account under this policy.”

The Appropriateness Policy described various account types:

“IG has four different accounts through which we provide investment services to clients:

• Share dealing Account (including ISAs & SIPPs). A Share dealing Account enables a client to acquire or dispose of cash equities through IG. Through a Share dealing Account a client is able to trade shares, ETFs and ETCs. It is not possible for a client to lose more than the funds held on their Share dealing Account. However, when specifically agreed between IG and the client, equity on a Share dealing Account can be held as collateral against trading on a CFD or FSB account.

• Trader Account (for CFD’s including MT4 accounts) Plus Accounts for financial spread betting, including MT4 accounts. A Trader or Plus account enable clients to enter into CFDs or FSBs respectively with IG. For each account, IG automatically checks the client’s cash balance such that the client always has sufficient funds on account to cover margin owing on open positions. Where the funds available drop below the required level, IG may contact the client informing them of this. If the client does not increase the funds on account, the client’s position will be cut back, either entirely or in part. The effect of this is that the client’s position will normally be cut back before the running losses exceed the client’s funds on account. Generally, although not always, clients will not lose more than their funds on account.

• Limited Risk Account (including CFDs and FSBs). Unlike the Trader, Plus or Select accounts a Limited Risk account prevents a client from losing more than they have deposited on the account (excluding transaction fees), as a Limited Risk account holder will always need to add a guaranteed stop to every trade placed. They will be charged a premium if the guaranteed stop is triggered. Before placing a trade a client will need to have sufficient funds on the account to cover the entire risk of the trade as well as the guaranteed stop premium, meaning that Limited Risk account holders are not subject to IG’s normal margin policy. IG will however close positions on a Limited Risk Account should transaction fees cause the account to go into a deficit.

• Select Account. Unlike the Trader/Plus accounts, risk monitoring on the Select account is much more client led. On the Select account, IG will make margin calls and then allow clients a period of time to pay before the clients’ positions are closed out. During the time that IG allows the client to pay margin, the position can get considerably worse and therefore it is possible with Select accounts that a client will owe more than their funds on account, albeit with certain parameters before the positions are closed out.”

The ‘Risks’ associated with the Defendant’s services are referred to at section 5.2 of the Appropriateness Policy. The basis for assessment, including wealth, experience and knowledge assessments is also explained. The Appropriateness Policy also explains at 6.2 that

“The points system recognises that a client with execution only or advisory experience with complex products (i.e. level 2 and level 3 products) is likely to be able to understand the risks associated with IG’s CFD & FSB services. It is therefore not inappropriate for these clients to be offered Trader/Plus Account.

Whilst a client who has traded OTC or exchange-traded derivatives only on a managed basis may not have an understanding of the all the intricacies and complexities of our complex products, they will know about the products and have a general understanding of the associated risks. For this reason it is not inappropriate for these clients to be offered a Limited Risk CFD or FSB account, or access to complex share dealing products.

Likewise a client who has traded physical equities on an execution only basis will have a general understanding of the financial markets, but not an understanding of the complexities of our complex products, as such it will only be appropriate to enable access to our complex services where other factors also contribute towards the client’s appropriateness score as detailed later in this policy. This is because shares and bonds are non-complex and do not share some of the defining characteristics and risks of CFDs and FSBs as described in 5.2. Such clients will be given access to a Limited Risk Account, recognising that the features of the products with which the client is familiar may be different to CFDs and spread bets is another reason why our educational programme is available on all IG Accounts.

Similar to the Trader, Plus and Select accounts, when using a Limited Risk Account a client has access to leverage, meaning that profits and losses can be magnified relative to the movement in the underlying market, therefore it is only appropriate to offer this account type to clients where they have experience or knowledge of trading derivatives, or experience of the financial markets plus professional/educational experience. Unlike the Trader, Plus and Select accounts it is not possible for a client to lose more than their initial outlay when using a Limited Risk Account, as such the experience required for this account type to be appropriate is not as extensive as it is for a Plus, Trader or Select account to be considered appropriate.

Unlike the Trader, Plus and Select accounts, it is not possible for a client to lose more than their initial outlay when trading in a Share dealing account. This includes trading the small subset of ETFs and ETCs, which through their use of derivatives may cause them to be ‘complex’ products. As a result, the requisite knowledge and experience to open a Share dealing account is lower than that for a Trader or Plus Account and a client would not need to have direct experience trading financial derivatives for this service to be appropriate. However, when this is the case, and given the inclusion of a subset of products which are complex, it would only be appropriate for those who had greater experience trading shares and bonds to ensure they understand the risks involved of investing in financial markets.”

At 6.4 of the Appropriateness Policy, the Policy explains that the Defendant would not carry out a further assessment if a client were to “open an additional account with it, which is for the same product type and same type of account as they already hold (i.e. another Plus spread betting account when they already hold a plus Spread betting account).”

In respect of the issue of vulnerability, the Claimant draws attention to guidance issued by the FCA in 2021 under the title “Guidance for firms on the fair treatment of vulnerable customers”. At [1.12], the guidance states:

“We use the terms ‘vulnerable consumer’ and ‘vulnerable customer’ interchangeably throughout the Guidance to refer to retail customers who are ‘natural persons’ and have characteristics of vulnerability. These characteristics may mean they are especially susceptible to harm, particularly where a firm does not act with appropriate levels of care.”

The guidance includes the following table setting out “Characteristics associated with the 4 drivers of vulnerability.”

At [2.19] of the Vulnerability Guidance, the following appears:

“Examples of harm and disadvantage that firms should be alert to

2.19

We explore some of the behavioural and personal consequences of vulnerability for consumers in our Occasional Paper 8 – Consumer Vulnerability and related research.

These include:

• Heightened stress levels due to difficult, or different, personal circumstances

• increasing time pressures due to additional responsibilities

• increasing pre-occupation (‘brain is elsewhere’) limiting their ability to manage

• processing power and ability decreasing due to competing pressures, for example due to the side effects, or emotional toll, of receiving medical treatment

• lack of perspective especially when experiencing something for the first time, not full understanding the broader implications; being unable to make comparisons, or see the ‘bigger picture’

• changing attitudes towards taking risks; people often become more ‘reckless’ and/or careless when under stress.

2.20

These consequences may affect the way vulnerable consumers engage with providers and may negatively impact their decision-making. For example, consumers with characteristics of vulnerability may be more likely to suffer from behavioural patterns such as ‘scarcity mindset’. This can reduce bandwidth and lead consumers to focus on certain factors at the expense of others (Mullainathan & Shafir, 2013, Scarcity: Why having too little means so much). This may mean consumers with characteristics of vulnerability are more likely to make poor decisions about buying and using financial services, exacerbating financial difficulties.”

At [4.7], the document states:

“An example of poor design that could result in harm to vulnerable consumers is contracts for difference (CFDs) offered to retail consumers spread bets. These complex, leveraged products are offered through online trading platforms. Before we imposed restrictions on how CFDs were sold to retail consumers, their projected returns made these high-risk, speculative products seem attractive. However, many consumers were unable to understand the complexities of the products or the impact of the leverage on the likelihood of the products making a profit. This put consumers, particularly those with low financial resilience, at risk of significant financial losses that they would be unable to absorb.”

It is not in dispute that the Defendant was an authorised person carrying on designated investment business. It was therefore under an obligation to comply with FSMA.

Section 138D (2) FSMA provides:

Financial spread betting as provided by the Defendant to the Claimant was (i) designated investment business within the meaning of COBS 2.1.1R and (ii) a service to which COBS 10 applied. The Claimant was a “retail client” of the Defendant for the purposes of COBS 2.1.1 and was a “private person” for the purposes of section 138D. It follows that, if the Claimant is able to establish that the Defendant was in breach of a relevant rule within COBS, he is entitled to recover damages for any consequential loss (subject to any defences otherwise applicable to a claim for damages for breach of statutory duty).

In Quinn v IG Index Ltd [2018] EWHC 2478, HHJ Pelling KC, sitting as a Judge of the High Court, commented of the relevant COBS obligations:

“[82] I accept that the effect of COBS 2.1.1 is to impose on a service provider a duty to carry out the assessment required by COBS 10 honestly, fairly and professionally in accordance with the best interests of its client. An unfair and unprofessional assessment of appropriateness would be a breach of COBS 10 however, not a breach of COBS 2.1.1….

[83] Any obligation to re-assess was governed by COBS 10 and any failure to carry out a re-assessment that was required would be a breach of COBS 10. Any re-assessment that should have been carried out had to be carried out honestly, fairly and professionally in accordance with the best interests of the defendant’s client by operation of COBS 2.1.1 and any failure to do so would also constitute a breach of COBS 10…

[85] The duty to warn was one provided for by COBS 10 and arose only where the provision of a spread betting service was or ought to have been assessed as inappropriate.”

However, Judge Pelling KC rejected the argument that the Defendant was under an obligation to re-assess the appropriateness on the occasion of later transactions, drawing attention to the terms of COBS 10.4.2, which provides that the service provider “is not required to make a new assessment on the occasion of each separate transaction. A firm complies with the rules in this chapter provided that it makes the necessary appropriateness assessment before beginning that service.”

Judge Pelling KC was also asked to consider the alleged duty of the service provider to prevent the unsuccessful gambler from placing bets. Of this, he said:

“[93] In this case however, [counsel for the Claimant] not only maintain that there was a general duty to prevent someone whose betting record was unsuccessful from continuing to place bets but that there was a narrower duty not to encourage an unsuccessful bet placer from continuing to use its services. I do not consider that the defendant was under such a generally expressed duty in relation to any client for whom the provision of a service has been assessed as appropriate. I have explained at length why I consider the defendant had fulfilled its obligation to assess appropriateness so far as the claimant is concerned.

94.

There may be room for a more narrowly cast duty not to encourage where a service provider knows or ought to have known that the bet placer was a problem gambler or was gambling or losing in excess of what he or she could afford to lose. However the claimant does not allege that he was a problem gambler prior to him giving the self-exclusion instruction to the defendant. The defendant strictly complied with that instruction even though the claimant tried to re-open his account with the defendant. There is certainly no evidence that the defendant considered the claimant to be a problem gambler or that he was spending more than he could afford. There is plenty of evidence that shows its employees considered the claimant to be a good customer whose business it was in the interest of the defendant to retain. There is however a difference between a conclusion that someone is gambling aggressively but within that person’s means and a conclusion that someone is a problem gambler. Although it is easy to lose sight of the fact in this case, it is to be remembered that the defendant earned revenue from the claimant whether he won or lost. There was an incentive to keep him as a customer whether he won or lost because the value of the business he placed was high.”

As HHJ Bird, sitting as a Judge of the High Court, considered MIFID II and the consequent introduction of COBS 10A in Day v Forex [2023] EWHC 1349:

“37.

The effect of reducing the class of non-complex products was that appropriateness assessments were needed for more products (complex products) than had previously been the case. The paper goes on to suggest that ‘Firms will want to consider the requirements of the appropriateness test and consider the sorts of knowledge and experience that may be appropriate for a firm to capture and assess when selling certain products. [FCA’s] existing rules in COBS 10 provide guidance for firms on how they can ensure that they are meeting our requirements to assess the knowledge and experience of their customers’. (para.11.12 emphasis added).

38.

It seems clear that whilst firms would need to conduct appropriateness assessments for a greater number of products as a result of MIFID II, the way that assessment was carried out would not fundamentally change. The ‘existing rules’ continued to ‘provide guidance’.”

Judge Bird went on to consider the effect of MIFID II on the decision in Quinn:

As to the existence of a duty at common law, to identify and act on the basis that the services were inappropriate, the Claimant was vulnerable and/or the services provided were not in the Claimant’s best interests, it is common ground that no broad duty of care exists, since the law does not impose a “general duty on a person to prevent his neighbour from harming himself” (a proposition approved by the Court of Appeal in the gambling context in Calvert v William Hill [2008] EWCA Civ 1427). That does not however necessarily prevent the court finding the existence of a narrow duty. As the first instance judge in Calvert (Briggs J, as he then was) said at [151];

“These and other cases (Footnote: ¹⁰) show that exceptional circumstances may give rise to a common law duty of care to prevent or mitigate the consequences or aggravation of self-inflicted harm. Such circumstances may include the assumption of control over a person while vulnerable to the consequences of self-inflicted harm, or the assumption of some responsibility for the care of, or provision of assistance to, such a person. In every such case the three stage [Caparo] test will be an important part of the analysis whether the circumstances are sufficiently exceptional.”

The Claimant further relies on the argument that the Defendant owed to the Claimant a fiduciary duty. In this respect my attention was drawn to the judgment of the Supreme Court in Hopcraft v Close Brother Limited [2025] UKSC 33. Amongst other issues, the court considered the role of vulnerability in the context of fiduciary relationships:

“[105] Attempts have been made to argue that the existence of a relationship, in which one party, A, is in a position of power over another, B, and B is dependent on A, is sufficient to give rise to fiduciary obligations. In Galambos v Perez [2009] 3 SCR 247, the Supreme Court of Canada rejected the contention that such a power-dependency relationship was sufficient on its own to do so. Cromwell J stated (para 75) that ‘what is required in all cases is an undertaking by the fiduciary, express or implied, to act in accordance with the duty of loyalty reposed on him or her’. He continued (para 76):

‘Thus, what is required in all cases of ad hoc fiduciary obligations is that there be an undertaking on the part of the fiduciary to exercise a discretionary power in the interests of that other party. To repeat what was said by McLachlin J in Norberg [Norberg v Wynrib [1992] 2 SCR 226], “fiduciary relationships … are always dependent on the fiduciary’s undertaking to act in the beneficiary’s interests” (p 273). As Dickson J put it in Guerin [Guerin v The Queen [1984] 2 SCR 335], fiduciary duties may arise where “by statute, agreement, or perhaps by unilateral undertaking, one party has an obligation to act for the benefit of another” (p 384).’

He clarified this statement in the following paragraph (para 77) and stated:

‘The critical point is that in both per se and ad hoc fiduciary relationships, there will be some undertaking on the part of the fiduciary to act with loyalty.’ (Emphasis added.)

Such an undertaking (to act only in the interests of the other) need not be express but could be implied in the particular circumstances of the parties’ relationship (paras 79 and 80). More recently the High Court of Australia in Naaman v Jaken Properties Australia Pty Ltd [2025] HCA 1, in the judgment of Gageler CJ and Gleeson, Jagot and Beech-Jones JJ stated that vulnerability is not the touchstone of a fiduciary relationship (para 43):

‘Vulnerability is relevant to the existence of a fiduciary relationship only to the extent that the vulnerability in question is suggestive of a responsibility on the part of the putative fiduciary to act in the interests of the vulnerable party to the exclusion of the interests of the putative fiduciary’.”

It is accepted on both sides that the Claimant needs to prove causation on a “but for” on the balance of probabilities – in other words, in so far as he proves any breach of duty on the Defendant’s part, he can recover damages to the extent that he proves on the balance of probabilities that, but for that breach, he would have avoided loss that he in fact has suffered.

This is a case which turns only to a limited extent on the witness evidence. In large part, the Claimant’s case is to be drawn by inference from matters referred to in documents, but in certain details he relies upon aspects of the witness evidence to support his case both as to vulnerability and as to the Defendant’s knowledge thereof. It is in consequence important that I assess the strength of the evidence. In doing so, I remind myself that witnesses who are being asked to remember matters that took place some time ago may be forceful in their evidence without necessarily being unreliable. Indeed, the witness who says that they have a clear recollection of matters is often the most dangerous of witnesses, since the apparent clarity of recollection may disguise a distorted recollection, for reasons developed by Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse [2013] EWHC 3560 and Ashley v Blue [2017] EWHC 1928. As Leggatt J put it in Ashley v Blue at [67]: “…the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.”

It is common that, in a case such as this involving essentially business or commercial relationships, documentary evidence is likely to be important in assessing the evidence of witnesses, since it will tend to show consistencies or inconsistencies which may be important markers of reliability. But, as the Court of Appeal said in Kogan v Martin [2019] EWCA Civ 1645, “as has very recently been noted by HHJ Gore QC in CBX v North West Anglia NHS Trust [2019] 7 WLUK 57, Gestmin is not to be taken as laying down any general principle for the assessment of evidence. It is one of a line of distinguished judicial observations that emphasise the fallibility of human memory and the need to assess witness evidence in its proper place alongside contemporaneous documentary evidence and evidence upon which undoubted or probable reliance can be placed. Earlier statements of this kind are discussed by Lord Bingham in his well-known essay The Judge as Juror: The Judicial Determination of Factual Issues (from The Business of Judging, Oxford 2000). But a proper awareness of the fallibility of memory does not relieve judges of the task of making findings of fact based upon all of the evidence. Heuristics or mental short cuts are no substitute for this essential judicial function. In particular, where a party’s sworn evidence is disbelieved, the court must say why that is; it cannot simply ignore the evidence.”

In fact, there is not a large number of factual issues in this case. Accordingly, the credibility of witnesses is not a central matter, but it is nevertheless appropriate for me to record my assessment of the witnesses and to make findings of fact on disputed issues.

The Claimant’s evidence suffered from two problems. First, he repeatedly sought to act as an advocate for his own case. One of the many examples of this is the point where, during re-examination, he announced that he wished the court to listen to a particular telephone call (that transcribed in Appendix 5). It is by no means unusual for those engaged in litigation which arises from their personal involvement in matters to wish to tell the court their story and ensure that it is presented in their preferred fashion. This does not necessarily indicate a witness who is not seeking to tell the truth. But excessive attention to advancing the case that favours the witness/litigant (as opposed to answering questions as they arise) gives rise to the obvious difficulty in distinguishing between the person’s best recollection of matters and what is the case that they wish to advance, regardless of whether it is based on their admissible evidence. There were various points in Mr Grogan’s evidence where it appeared to me that he was desperately keen that a particular impression should be given of himself that would favour his case, in particular in respect of his vulnerability. This causes me to be cautious about the reliability of what he did have to say.

The second problem is that, in several respects, the Claimant’s evidence was clearly inaccurate.

As against the Claimant’s evidence, Ms Riley gave her evidence in a straightforward way. She could not remember all the points that were put to her. For example, she could not remember whether they had drunk champagne at the event in central Manchester and she frankly conceded that they may have done so. That kind of concession was more indicative to me of a witness who was trying to assist the court than one who was lying.

In these circumstances, I look at the evidence regarding the alleged incident involving Ms Riley spilling coffee on herself. In and of itself, that incident, and Mr Grogan’s alleged comment about it, is of no relevance to the case. However, Mr Grogan uses his account of the incident as an explanation as to why Ms Riley’s stopped being his Account Manager. He sees that as an example of underhand behaviour on the part of the Defendant which is consistent with his assertion that the Defendant carried on permitting him to trade when it should not have done so. If in fact the incident the Claimant denies did take place, this would not only further harm his credibility but would lend further to support to the Defendant’s contention that the Claimant is making unjustified criticisms of it.

In my judgment, it is highly likely that Ms Riley’s account of the incident is correct and the Claimant’s is incorrect. I say so for the following reasons:

It follows from the above that I have considerable doubt about the reliability of the Claimant’s evidence in this case. Whilst I have no doubt that he feels very strongly that he has been let down by the Defendant, his assertion that he said or did things that demonstrated vulnerability is one of which I am very cautious.

It is in this context that I consider the Claimant’s assertion that the conversation on 13 September 2018 about his trading activity following the new ESMA rules was “orchestrated,” following a telephone call from the Claimant’s mobile phone (which he now cannot access) to Ms Riley’s personal mobile phone (which was a call which the Defendant could not and would not have recorded). The assertion that he has lost the mobile phone is of course one that is easily alleged to be a convenient excuse for why he cannot produce the relevant evidence. I am not persuaded that it would be right to make a finding that the Claimant is not telling the truth about the loss of the mobile phone, although it does raise a suspicion in my mind. However, independent of that suspicion, I am not persuaded on the Claimant’s evidence that there was any orchestration of the kind that he alleges took place.

I have identified above the three aspects of the case advanced by the Claimant:

The Claimant alleges at [54] of the Particulars of Claim ten (Footnote: ¹¹) breaches of duty on the Defendant’s part:

Of these allegations, it appears to me that the first two relate to the appropriateness case, the next seven relate to the vulnerability case and the last relates to the best interests case. The allegations raise common issues and are most conveniently dealt with by considering the arguments in the three categories identified at [3] above.

The Claimant’s case as to the appropriateness of the Defendant’s products is that, having regard to his assets, as declared to the Defendant, and his experience, the Defendant was in breach of the duty under COBS 10A, specifically that in COBS 10A2.3, to “determine whether that client has the necessary experience and knowledge in order to understand the risks involved in relation to the product or investment service offered or demanded when assessing whether an investment service as referred to in Article 25(3) of Directive 2014/65/EU is appropriate for a client.” The Claimant contends that he did not provide sufficient information to assess appropriateness, as a result of which the Defendant was under the CPS 10A 3.2 duty to “warn the client that the firm is not in a position to determine whether the service or product envisaged is appropriate for the client.”

Insofar as the Defendant contends that the Claimant was determined to be appropriate by the fact that he passed the appropriateness quiz, the Claimant points to the fact that he failed the quiz on the first attempt but then retook it almost immediately. On retaking the test, one of the questions was identical to one in the first test and in any event allowing somebody to retake the test immediately after they have failed it, but providing them with explanations for the failure as explained above, makes the retaking of the test almost meaningless - the person taking the test could simply parrot the corrections to their wrong answers without that showing any understanding of the underlying issues and therefore the appropriateness of the product.

The Defendant responds that there is simply nothing in the material to indicate that the Claimant did not meet the appropriateness criteria at the outset. Asking questions in a test is considered by ESMA to be an appropriate way to consider this issue. Whilst in an ideal world one would not ask the same question twice over, that question taken on its own did not make the difference between the Claimant passing and not passing the appropriateness test – he would have done so in any event.

Further, the real issue that is being assessed is a person’s understanding of the risks that are involved. The Claimant’s answers show that he understood the risks involved. Further, his own experience as described within his witness statement and set out above indicates that he was well aware of the risks. On his own case, the problem was not a lack of knowledge or understanding – it was compulsive behaviour, which is not a factor that the appropriateness test seeks to assess.

I see no grounds for coming to the conclusion that the Defendant breached its COBS duties at the outset. For the reasons identified by the Defendant, the evidence is that the Claimant perfectly well understood the risks involved in engaging in spread betting through the Defendant.

In fairness, it was readily acknowledged during closing submissions that, even if the Claimant were able to prove a breach of duty in respect of the initial assessment of appropriateness, there was no prospect of proving any causative loss as a result of that breach.

The second case advanced by the Claimant is as to the alleged breach of an ongoing duty to assess appropriateness. As counsel for the Claimant acknowledged, having regard to the decisions of HHJ Pelling in Quinn v IG Index Ltd and HHJ Bird in Day v Forex, regardless of whether one is concerned with obligations that arise under COBS 10 (as in Quinn) or COBS 10A (as in Day), the idea of an ongoing duty to assess appropriateness was rejected. Whilst neither decision is binding upon me, in my judgment I should respect the decisions of two distinguished Specialist Circuit Judges sitting at the same level as me.

As is argued on behalf of the Defendant, the existence of an ongoing duty to assess appropriateness or a duty to reassess appropriateness that arises at a later stage than the initial dealings between client and service provider is inconsistent with the nature of the task in assessing appropriateness. “Appropriateness” is about whether the service being proffered is of a kind appropriate to a particular client, based on their knowledge and experience, as is apparent from the terms of COBS 10A 2.3. It is not concerned with the question of whether the client is an appropriate person to access any particular product. If the latter were the case, the changing nature of the client’s conduct might be argued to give rise to an ongoing duty to assess appropriateness or at the very least a duty to assess appropriateness when particular circumstances come to light. However, in the actual circumstance that appropriateness relates to the suitability of the products not to the suitability of the client, the more the client trades the more likely that a product will be appropriate to them.

Accordingly, one can see that when a very different product is being proffered to the client, it might be argued that there is a duty to reassess. But the reference by Judge Pelling KC at [93] in Quinn to a “narrow” duty to prevent a problem gambler from placing bets is a feature not of appropriateness but of vulnerability which falls to be dealt with in the second case advanced by the Claimant rather than the first.

Notwithstanding the valiant efforts of counsel for the Claimant to argue otherwise, I am not persuaded either on authority or by looking at first principles that the proper application of COBS or any common law duty that can be inferred from COBS gave rise to a duty to reassess appropriateness either simply because the Claimant applied for professional client status (which he did not obtain in any event and therefore did not cause him any loss) or on moving from a limited risk to a standard account.

Still further, I see no prospect even on the Claimant’s case of showing that any reassessment of appropriateness would have given rise to a different result unless that assessment had alleged problem gambling, which the Defendant was not obliged to do. In any event, even if the Claimant had not passed the test permitting him to open a standard account, it is not in dispute that he could have continued to operate a limited risk account. Had he done so, he could have engaged in trades and upgraded in any event. There is no reason from the evidence to think that the Claimant would not have engaged in trading had he been permitted to do so. Accordingly, any possible breach of duty in the original assessment of appropriateness would have made no difference to his ability to engage in spread betting and ultimately to suffer the same losses that he actually did so unless the result of the appropriateness assessment was to prevent him from opening an account in the first place. For reasons I have indicated, I see no reason to think that it ought to have done. Once the account was opened, the Claimant’s conduct, and indeed his own case, make it overwhelmingly likely that, were the Defendant to have permitted him to engage in any spread betting, he would have suffered losses corresponding to those that he actually incurred, albeit potentially in slightly different circumstances.

Thus, the arguments based upon alleged inappropriateness fail both on the question of breach of duty and on the question of causation.

As I have indicated above, the way that the Claimant puts his case far more obviously raises issues as to whether he was a problem gambler whose vulnerability ought to have been identified by the Defendant than the primary case advanced that the products were inappropriate for the Claimant and that identification of the inappropriateness would have avoided losses.

In this regard, the Claimant inevitably lays a great deal of emphasis upon his own evidence that he was vulnerable and addicted to gambling. There is no medical or other expert evidence that supports that conclusion. For reasons that I have identified above, I consider the Claimant’s own assessment of his behaviour and compulsions to be inherently unreliable, in particular insofar as he contends that his behaviour ought to have given rise to an inference that he was vulnerable and a problem gambler. In my judgment that is an issue that must be looked at objectively from the point of view of the Defendant having regard to material that was actually drawn to the Defendant’s attention.

I have not been invited to find that Claimant suffered from a recognised gambling disorder. The Claimant asserts that he had an “addiction” but the issue before the court is whether the Defendant knew or ought reasonably to have known that he was vulnerable

In assessing that issue, the Claimant’s case involves the court taking a paternalistic view, by looking at a person’s losses and their contact with the benefit of hindsight and drawing from that the inference that the problems should have been visible in advance. The danger of doing this is that the court assumes the right to substitute its view of what is in a person’s best interest for the person’s autonomy to make that decision on their own behalf, protecting them from their own errors of judgment but failing to respect their right to make decisions, including decisions that retrospectively (or even at the time) might have been ill judged. The Claimant’s own case is that he wished to continue gambling but ought to have been prevented from doing so. But, as noted above, the Court of Appeal in Calvert v William Hill declined to find the existence of a general duty on a person to prevent another from harming themselves, a principle to which exceptions can be found, as Lord Briggs noted in his first instance judgment in Calvert, but which are the exception to the norm of the courts respecting people’s autonomy.

It is in that context that I analyse the various arguable elements of the case that the Defendant should have realised that the Claimant was a vulnerable person with a gambling problem whom the Defendant was under a duty to protect from himself.

The first allegation I consider is that, having acquired the knowledge in August 2018 that the Claimant was a compulsive gambler, the Defendant failed to classify him as a vulnerable customer, and to close or suspend his account in August 2018. This allegation is based entirely on the Claimant’s alleged disclosure in the meeting in central Manchester in August 2018 of a gambling addiction. However, as I indicated in assessing the Claimant’s evidence, it was clear from cross-examination that he was not saying that he had expressly referred to being an addict or indeed having a problem with gambling. He may have disclosed his gambling history, but the way that he himself describes it is consistent with Ms Riley’s assessment of him as one who “likes gambling.” I can see nothing from the Claimant’s description of the meeting in August 2018 from which the listener would draw the inference, without more, that his gambling was a problem. Furthermore, the information available to the Defendant in advance of this meeting would not set its contents in a different light. The Defendant is not under some kind of obligation to review a person’s gambling and to determine whether they are gambling beyond their means. The service provider simply does not have the material to do this.

This point is not weakened by the vulnerability guidance issued in 2021. It is true that that guidance provides more clear examples of indicators that may drive vulnerability and that it may consequently lower the threshold at which a service provider ought reasonably to act so as to protect a vulnerable customer from harm. But merely because the guidance recognises factors around vulnerability that may not previously have been obvious to service providers does not mean that, on the facts of this case, the Defendant became under some duty latterly to stop the Claimant gambling. It had a duty to act if it was aware of vulnerability. The difficulties for the Claimant are twofold: (1) identifying the vulnerability which is stated to have existed and (2) identifying precisely which features of his behaviour ought to have triggered that duty.

This latter point is in my judgment fatal to the second and third aspects of the Claimant’s Vulnerability Case, namely that the Defendant should have recorded the Claimant’s financial and personal information on the opening of the account with sufficient precision such that it could assess whether he was depositing and/or losing sums which would be beyond what he could afford. I accept the Claimant’s proposition that, on a careful analysis of his resources, they were clearly being eroded by his gambling but this was neither obvious to the Defendant nor something that it was under a duty to keep under continuing supervision.

Yet further, the fourth point advanced by the Claimant, that his unsuccessful application for professional client status should have been treated as a “red flag” which alerted the Defendant to the problematic nature of his gambling is also in my judgment doomed to failure. Unless the failed application for professional client status was automatically and without more treated as rendering the applicant unsuited to continuing to use the Defendant’s services, I do not see why the unsuccessful application should somehow deny the Claimant the opportunity to access services that otherwise he very clearly wished to.

Like the second and third cases advanced by the Claimant, the fifth and sixth cases, namely of a failure to take reasonable care to implement or operate systems, processes and/or controls to identify that the Claimant was a customer who was losing sums in excess of what he could afford and/or had gambling problems, supposes that the Defendant was under a duty to do this. I see nothing in the authorities to impose upon the service provider in the position of the Defendant such a duty. Insofar as the Claimant was a vulnerable customer, a narrow duty of the kind referred to by HHJ Pelling KC in Quinn provides a proportionate remedy for those vulnerable customers whose vulnerabilities should have been obvious to the Defendant, without imposing upon the service provider an undue burden to ascertain a person’s vulnerability. Such a duty is consistent with the regulatory regime referred to above, both as set out in COBS and as established within the Defendant’s own internal procedures. A broader duty specifying particular steps to be taken is, absent some express statutory or regulatory obligation, beyond that which the common law should impose upon the service provider.

The Claimant argues that the increase in his assets recorded in March 2021 should have alerted the Defendant to an issue. The increased assets recorded are said, as noted at [50] above to reflect the Claimant bringing within his stated funds the value of real estate, which he necessarily would have had to sell in order to deposit the relevant monies. This would have been a particular “red flag” to a responsible company in the position of the Defendant and it should have led to a further examination of his vulnerability (and/or the appropriateness of the product, as to which see my conclusion above).

In response to this, the Defendant acknowledges that the Claimant may have in fact have sold properties in order to fund his deposits. That is not necessarily an indication of a problem gambler and in any event the Claimant’s inconsistent statements as to his assets over the years would not allow the Defendant to identify how he was funding, still less to make an assessment as to whether he was vulnerable or had a gambling problem.

I agree that the material referred to by the Claimant does not show a consistent and obvious picture of the Claimant as a vulnerable or problem gambler, nor is the Claimant able to identify a line of enquiry that the Defendant should have followed so as to find out what was truly going on. The Defendant was entitled to rely upon the picture that the Claimant repeatedly portrayed that he was content to continue gambling, without ever raising indications that ought reasonably to have caused a service provider in the position of the Defendant to doubt what he was saying.

The final aspect of the Claimant’s case based upon vulnerability is the argument that the Defendant failed to ensure that he was fairly treated as a vulnerable customer. That argument fails in circumstances in which the Claimant has simply failed to show material from which the Defendant ought to have drawn the inference that he was vulnerable.

It follows that the Claimant’s Vulnerability Case cannot succeed in that no breach of duty is identified.

I decline to reach a decided view on causation issues because, in order to assess the causative significance of any particular failing, the court would need to identify with some care what the failing was, when it occurred and how a different course of action might have led to a different outcome. In the absence of a clear and defined case as to what breach of duty is made out, I am not in a position to reach a conclusion as to the extent to which the Claimant’s losses would have been avoided. That said, if I were wrong on issues as to the alleged breach of duty in the Vulnerability Case, a determination of when the Claimant ought to have been prevented from continuing to engage in spread betting should readily enable a conclusion to be reached as to what losses would have been avoided, given the Claimant’s analysis of the losses over time.

If the Claimant were otherwise able to make out his case (whether in vulnerability or otherwise), the Defendant makes the point that it is his case that he was addicted to betting. He could have opened another spread betting account with another provider and suffered exactly the same loss. Whilst it is clearly possible that this would have been so, the Claimant’s own uncontradicted evidence was that on occasions he had been able to stop himself from engaging in gambling. I see no reason to doubt what he had to say on this issue and it follows that it is possible that, had the Defendant taken positive steps that stopped him gambling with it, his gambling may have come to a conclusion.

The argument that you would have suffered the same losses in any event involves the Defendant asserting a counterfactual argument. Given the Claimant’s stated previous behaviour (which I am willing to accept), I am not persuaded on the balance of probabilities that the Claimant would have suffered losses if the Defendant had stopped providing him with services. Accordingly, if the case were otherwise successful, I would not consider this last causation argument to be determinative of the case against the Claimant.

The final aspect of the case that I consider is the Claimant’s Best Interest Case, in other words that the Defendant fails to act honestly, fairly and professionally in accordance with his best interests. If the Defendant had had positive knowledge of the Claimant’s vulnerability, and/or addiction and/or gambling problems, I would have held that the Defendant was thereby in breach of an obligation to act in accordance with his best interests, as alleged. However, my findings in respect of vulnerability as set out above preclude such a conclusion and it follows that the Best Interests Case also cannot succeed.

The issue as to causation on the Best Interest Case would fall to be determined in the same way as it is on the Vulnerability Case. Simultaneous findings on the issue of vulnerability and of best interests would mean that the loss under either case was in the same amount. For reasons I have identified, no loss is in fact shown because no breach of duty can be demonstrated.

For substantially the same reasons, I reject the contention that the Defendant owed the Claimant fiduciary duties. There was no undertaking, express or implied, that the Defendant would act solely in the Claimant's interests or with the loyalty required of a fiduciary. I do not see that the judgment of the Supreme Court in Hopcraft v Close Brother Limited points to a different conclusion.

I deal briefly with the issue of contributory negligence, though it was not a main stay of the submissions of either side. The strength of any such argument depends to a significant extent on the finding of vulnerability. I can see force in the Claimant’s argument that, if a finding of vulnerability were made, it would not be appropriate to make a deduction for contributory negligence since the Claimant is not to be blamed for conduct that is beyond his control. However, an assessment of this issue would itself require examining the basis upon which vulnerability was found. Given that I have not concluded that the Claimant was in fact vulnerable, it is not an issue that I should determine in the abstract.

It follows from this judgment that the Claimant fails to persuade me that the Defendant was in breach of duty and that it is liable to him for the sums claimed or any sums. The claim must therefore be dismissed.