Help with BLUE INDEX claim

tysoup

I thought I would share my recent experiences with a company called Blue Index in the hope that someone can offer help and or advice.

Bascially I was cold called one day and asked if I was interested in a managed Investment involving CFDs. I did some searches on google and couldnt find any negative comments on the company so agreed to go ahead. The salesman was very pushy and wanted me to invest £10,000. I said would only invest £2,500 initially to give me a feel for the company.

They managed to turn my investment of £2,500 into £900 in 3 days!

I am a experienced investor and have used leveraged products myself so I am fully aware of the risks involved. However that level of loss in 3 days is, in my opinion, negligent. They were charging £50 to open a trade and £50 to close it. On the first day my assigned broker opened 7 positions which would have had to gain £700 just to cover the fees. This even though I clearly stated I wanted a low risk stratedgy with minimum involvement.

I complained to the company who I later found out are a part of IG INDEX and their response was that I shoud have been aware of the risks and thay were not prepared to offer any compensation.

The only thing I can think of is to complain to the FSA. Does anyone have any other suggestions or a view on what my chance for compensation are?

tysoup

any thoughts?

Biggles

You would have signed a risk agreement when you opened the account.

But I thought Blue Index were execution-only. There's no mention on their website of managed investments. Is this directly with BI?

cheerfulcat

tysoup wrote:

Bascially I was cold called one day and asked if I was interested in a managed Investment involving CFDs. I did some searches on google and couldnt find any negative comments on the company so agreed to go ahead. The salesman was very pushy and wanted me to invest £10,000. I said would only invest £2,500 initially to give me a feel for the company.

[...]
I am a experienced investor and have used leveraged products myself so I am fully aware of the risks involved. [...]

I complained to the company who I later found out are a part of IG INDEX and their response was that I shoud have been aware of the risks and thay were not prepared to offer any compensation.

The only thing I can think of is to complain to the FSA. Does anyone have any other suggestions or a view on what my chance for compensation are?

My first thought is that if you have used leveraged products before you may not have that much in the way of grounds for complaint as far as the product is concerned. It's not as if you didn't know how they worked.

Nor do I think that you can complain about bad investment advice, as long as what was advised was not unsuitable for you.

I think that you may however have a legitimate complaint about the cold-calling although it must be said that doing business with cold callers is a bad idea. And this is the first I've heard of people offering CFD trading through cold calls; I wonder where they bought their list? Might be worth complaining to whomever you traded CFDs with before.

Anyway, your first port of call should be the FSA.

( BTW, it's a shame that your Googling didn't throw up this thread from T2W; it would almost certainly have saved you money. )

tysoup

It was definately a managed service. I didn't choose the shares but was asked each time if it was ok to go ahead.

I did sign a risk agreement and if I had lost that sort of money over a 6 month period i wouldnt have complained. To lose that amount in 3 days is what i have a problem with.

I don't think the investments made were suitable for the size of my account or the risk profile i requested.

equitydealer

I've never heard of low risk CFDs

michael_Bricks

Unless I've misunderstood this totally, you have traded derivative products before, you signed all the paperwork, were aware of the risks and agreed to every trade done, and you are complaining???

I am currently looking into CFD trading as I think the product is really flexible in these volatile markets, I'll probably do my own thing but I'd certainly like some research if it's free (!). Can you get free research anywhere without having to sign up by the way - I imagine you can't but you never know.

If you hadn't agreed to all the deals I can understand your grievences but surely this is performance related, looking at the Blue Index site (they are one of the few firms that actually called me back when I left my details) they seem to stress the risks up front - did you really think that CFds were low risk?? I can understand how you could adopt a low risk strategy (going short of physical equity holdings) but surely no one really goes into leveraged trading thinking it's a low risk way to make money - I will be using a few thousand but it will be money I can afford (and in someways actually expect) to loose, as perverse as that sounds!

tysoup

Yes I understand CFDs are high risk. This risk should be tempered to high extent by the use of stop losses do prevent heavy losses that can otherwise occur.

I'll give you an example where I think the account was badly handled. The account size started at £2500, big enough that I could see how the company performed without doing any real damage. On day one the guy from blue index opened seven positions. Each position incurred a £50 fee to open and another £50 to close. In other words the positions had to gain £700 in order to break even. Or in other words he spent 30% of the entire account in commission fees on the first day.Yes I did give permission to trade but remember this is supposed to be a managed service so I think that is different to just supplying a list of shares to play with. There should be consideration to the size of the account and suitability of the shares in relation to the size of the account and the trading stratedgy selected. None of which, in my opinion, were taken into concideration. All they were interested in was the COMMISSION and nothing else.

If you have money you can afford or even "expect" to lose then I can't recommend Blue Index highly enough. If the though of a totally inexperienced trader supplying you some random names with little or no reasoning behind it appeals then you will be very happy and Blue Index will be even happier.

michael_Bricks

I don't want to lose money but I understand that CFds are the riskiest part of my (smallish) portfolio - I don't understand why you are shocked at the costs, most of the brokers I've spoken to charge around the same unless you are a really big player (£100k plus) and they were upfront about the costs before doing the deals.

I'm all for slamming brokers (I'm currently in negotiations with my old mortgage broker for not telling me about the redemption penalties on my loan for example) and in truth I think the way the City works is quite unfair at times (how many poor brokers do you see after all) but I don't understand why you think you are entitled to compensation in any way, honestly.
You wouldn';t be complaining if the 7 trades had made you money after all! I am going to sign up to their research for free anyway so I'll report back.
I lost £6000 spread betting last week and was told by a dealer (not Blue Index) that 'all our clients are buying the Dow here - it then dropped another 300 points!) - I think they would rather I made money (less hassle for them) but at the end of the day, it's my call isn't it?

mroller

Did you know about the commissions they charge before giving them your money? you might have some legitimate ground for complaint here.

michael_Bricks

Good point, did they write to you confirming their costs, I think they have to do that. I'd be surprised if they didn't though, it's hardly worth leaving yourself open like that really.

Tysoup?

Let us know.