Stocks and shares

With this type of investment, customers can’t deal directly with the stock market. If they want to buy or sell shares or stocks they’ll need to use a share dealing business or stock business such as yours.

Most shares are held electronically, in which case, the share dealing business usually acts as the nominee. This means that the shares are recorded on the register in the share dealing company’s name. We still see some complaints involving share certificates however.

Other less common forms of complaints involve advisory arrangements and discretionary management of share portfolios. More guidance on our approach to suitability complaints can be found here.

Complaints relating to stocks and shares generally involve:

• individual transactions
• transfers between firms
• corporate actions
• digital share dealing platforms
• share dealing charges

 In disputes about stocks and shares, customers may complain that you:

• made errors in setting up and running a share dealing account
• made errors in transferring the account elsewhere
• made errors in arranging a transaction
• charged the customer unfairly
• made errors in dealing with a corporate action
• lost a share certificate

When we look into complaints about stocks and shares, we consider things like why a transaction went wrong, how long things took, what the terms and conditions said and whether communication was clear.

We’ll take into account the facts and the actions of you and the customer.

Sometimes, we’ll need to get evidence from other parties too, such as the registrar or the other firm, in complaints about transfers.

Errors in setting up, running or transferring a share dealing account

When we receive a complaint, we’ll look at the contract between you and the customer to find out which service they offered, based on the type of agreement made with the customer. 

If the customer complains that you took too long to set up an account or transfer it elsewhere, we’ll investigate whether the time taken was reasonable.

If the shares were held in an ISA, we’ll also take into account the HMRC guidance that transfers shouldn’t take more than 30 working days. More information on our approach to stocks and shares ISAs can be found here.

If we decide that you took too long, we’ll decide whether the delay caused the customer financial loss or inconvenience.

Sometimes the customer says they wanted a share dealing account set up sooner so they could buy a particular share. And because the account wasn’t set up sooner, they couldn’t buy the shares they wanted or they missed the price they wanted.

In this case, we’ll usually ask for evidence.

An order wasn’t properly executed 

If a dealing system encountered a problem that prevented the customer from placing an order to buy or sell, we’ll consider the reasons for why the system didn’t work. We’ll also look at your terms and conditions about providing trading systems. 

If we decide you were at fault, we’ll look at how the customer was affected. For example, businesses can’t usually guarantee that customers can trade online. In this case, we’ll consider whether it was reasonable for the customer to have tried an alternative, like phone dealing.

Often, we’ll need to consider the type of order in question. Read more about orders:

At-best orders
Customers sometimes complain that they didn’t get the best price available on the day. But at-best means the best price quoted at the time of going to the market, not the best price quoted on that particular day. You must go to the market within a reasonable time of the customer's order being placed.

So in this case, we’ll consider whether you took sufficient steps to get the best possible result for the customer (according to your best-execution policy).

Limit orders
Sometimes complaints arise from misunderstandings. We’ll investigate whether you should have been clearer about the terms of the limit set, on the phone or in writing.

In some cases, a customer complains that the market price went through the price set in the limit order but you failed to carry out the sale or purchase.

We’ll look at market data to see whether the limit price was breached and also consider the particular circumstances of the case.

Unfair charges

If you introduced new charges or fees on share dealing accounts, for example commission or fixed fees, our starting point would be to look at the contract between you and the customer at the time of the change. We’d look at:

• what it said about varying the contract
• whether the change was in line with the contract
• legislation and case law that applies to unfair contracts

We’ll also want to look at how the change was communicated. We’ll consider this in light of the Financial Conduct Authority’s rules on communications being fair, clear and not misleading.

Corporate actions  

If you’re acting as nominee, the shares are recorded on the share register in your name.  In this case, you should usually make sure that the customer is kept informed about anything that could affect their interests as a shareholder, including:

• takeovers
• share issues
• general meetings
• rights issues and other share reorganisations

A typical complaint might be that you didn't notify someone about a rights issue in time to buy new shares.

If a customer feels they haven’t been kept informed, we’ll look at the terms and conditions of the your involvement and what you told the customer.

But we’ll also consider what’s fair and reasonable in the case of the individual corporate action in question. We might also need to look at the timescales and deadlines involved.

Lost share certificate

Shares held on paper, in the form of a certificate, may get lost or destroyed. If a certificate is lost, a registrar won’t issue a duplicate until the owner of the share certificate signs a letter of indemnity. This letter frees the registrar of any costs if the claim turns out to be fraudulent. The owner of the shares pays for the indemnity.

Sometimes we decide the share dealing company was responsible for the loss, for example, because the customer had notified the business of a change of address but the business sent the certificate to the old address. In this case, we may tell the business to pay for the indemnity.