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Online Traders: Have you changed from retail to a professional client?
When trading on online platforms, you will be classified as either a retail or professional client at the outset. If you are originally classified as a retail client, it is possible to request to become a professional client - or, on occasion, the online platform may choose to reclassify you.
When changing from retail to professional client status, there are tests that the platform provider must apply to ensure that it is appropriate for this switch to be made. This is because of the protections that will be lost when changing from retail to professional. Under rules established by the Financial Conduct Authority, retail clients are given the greatest level of protection – they have to be provided with more information about any transactions, platform costs, commissions, fees and charges and they will also receive negative balance protection.
Professional clients will normally have access to more favourable rates and benefits such as greater leverage, but in turn will waive their right to some of the protections that are available to retail clients, including negative balance protection. This is because they are assumed to be capable of understanding the risks involved and making their own decisions about investments.
If you have made such a change of classification status, you may be entitled to claim compensation from the trading platform provider for any losses or damages that you have suffered, if you did not meet the requirements to become a professional client or you were not informed of the potential risks.
At Penningtons Manches Cooper, our team of specialist lawyers help both retail and professional traders who may have been mistreated. We take on group claims on a no win, no fee basis, meaning that you only pay our fees if we succeed in winning you compensation. You will be given an option to agree to this at a later date. If you are interested in learning more and seeing if you may have a claim, simply fill out the brief form below, click send and we will be in touch with you.