The involvement of an authorised South African financial services provider in an offshore trading arrangement does not necessarily place every aspect of the relationship within the jurisdiction of the FAIS Ombud.
A decision delivered by the Financial Services Tribunal (FST) on 9 November 2026 highlights the importance of establishing what services the local FSP provided and whether the alleged misconduct relates to advice or intermediary services falling within the jurisdiction of the Ombud for Financial Services Providers.
Allegations of pressure to deposit more money
A Colombian investor, Eduardo Bernal de Wrede, applied for reconsideration of the Ombud’s dismissal of his complaint against XMR Markets (Pty) Ltd.
De Wrede told the Ombud that representatives of XMR Markets contacted him from about September 2025 and encouraged him to invest through a trading platform. He alleged he was repeatedly persuaded to deposit additional money on promises of profitability, account growth, and financial opportunities.
His complaint referred to persistent pressure to increase his deposits, misleading statements about profitability and account security, difficulties or refusals when he attempted to withdraw money, and changing explanations and additional financial requirements before withdrawals could allegedly be processed. He initially alleged possible investment fraud but later withdrew the fraud allegation.
The Ombud dismissed the complaint on several grounds, including lack of jurisdiction. The Tribunal said it could not have jurisdiction to reconsider a complaint that fell outside the Ombud’s statutory jurisdiction.
Different responsibilities for the local FSP and offshore principal
The Tribunal recorded that XMR Markets is a South African company and a registered FSP under the Financial Advisory and Intermediary Services Act. The client agreement divided responsibilities between the company and its offshore principal, LP Solutions LLC.
According to the agreement on which the Ombud relied, LP Solutions was the contractual counterparty, maintained the trading account, and executed transactions on an execution-only basis. The agreement stated that the investment services provided by the principal did not constitute financial, investment, or other advice.
The agreement authorised XMR Markets to hold client money on behalf of the principal. It required the company to take “every possible measure” to safeguard those funds against use for its own account and to hold client money in a segregated client bank account.
The allocation of responsibilities was central to the jurisdictional question. The Tribunal said the Ombud did not have jurisdiction over LP Solutions because it was a foreign entity and not a registered FSP under the FAIS Act. De Wrede therefore had to establish a complaint arising from advice or intermediary services rendered by XMR Markets.
De Wrede’s position on the client agreement presented a further difficulty. The Tribunal said he had initially denied concluding the agreement and alleged that his signature had been forged. It said that although he repeated this denial in his application, he then accepted the agreement relied on by XMR Markets without explaining the change or addressing its contents.
De Wrede did not deny the existence of LP Solutions or its identification in the contractual documents as the principal or counterparty for the CFD transactions. He also acknowledged the distinction identified in the Ombud’s decision.
The CFDs were financial products
The Tribunal considered whether the CFDs traded through the platform were financial products for the purposes of the FAIS Act. Only advice or intermediary services rendered in relation to a defined financial product may form the subject of a complaint that the Ombud is empowered to consider.
The FAIS Act’s definition of a financial product includes securities as defined in the Financial Markets Act. The latter definition includes derivative instruments. The Tribunal therefore said it appeared that CFDs were financial products for FAIS purposes.
This did not resolve the jurisdictional issue. The Tribunal still had to consider whether XMR Markets had advised De Wrede to enter the specific gold CFD trades that caused his loss.
The Tribunal found that he had produced no evidence to this effect. LP Solutions was identified as the contractual counterparty for the trading transactions. The Tribunal said the agreement with XMR Markets concerned technical assistance, not advice, and found no evidence that the local FSP had advised De Wrede to conclude the specific trades.
Deposit communications did not establish advice or causation
The Tribunal also considered the allegation that De Wrede had been persuaded to make additional deposits on representations that the money was required to facilitate a refund or update his account and would not be exposed to market risk.
In its determination, the Ombud found that communications encouraging a client to deposit money did not, without more, establish that regulated financial advice had been rendered or that XMR Markets had guaranteed the performance of the subsequent CFD transactions.
The Ombud referred to the client agreement and risk disclosures warning of the speculative nature of CFD trading and the possibility of losing the invested capital. It found insufficient evidence that XMR Markets had expressly or implicitly guaranteed De Wrede’s capital or the performance of his CFD investments.
“Even accepting that the complainant may have been encouraged to make further deposits, the evidence does not establish that the subsequent market losses were caused by a financial advisory service rendered by XMR Markets, as opposed to the complainant’s own trading activity and the market performance of the underlying CFD positions,” the Ombud said.
The Tribunal separately considered whether XMR Markets had breached its obligations as an intermediary within the functions set out in the client agreement. It found that no such breach had been alleged.
Application did not meet the test for leave
The Tribunal said it could not understand the documents De Wrede filed in Spanish. It also said he could not support his application for leave with new material that had not been before the Ombud.
The test for granting leave was whether the proposed reconsideration application had a reasonable prospect of success. Because the matter was decided on the papers, De Wrede had to satisfy the Tribunal that his version was probably correct and the respondent’s version probably incorrect. If doubt remained, the application had to be dismissed.
The Tribunal found that De Wrede had not met this test and refused him leave to apply for reconsideration.
