The FAIS Ombud has sounded the alarm over a surge in complaints from consumers who have lost significant sums while day trading on online platforms. According to the Office, many consumers plunge into day trading without fully appreciating the risks involved – or the limited recourse available when things go wrong.
The Ombud said most complainants open trading accounts on their own, completing onboarding documents, due-diligence forms and risk disclosures, and confirming that they have read and accepted the platform’s terms and conditions. These documents, readily available online, make the risks explicit.
Although many platforms are registered with the Financial Sector Conduct Authority as financial services providers, the Ombud noted that most are not authorised to give advice. Even those that hold advisory licences “go to great lengths” to record that no advice is being provided. As a result, investigations routinely conclude that consumers accepted the risks and executed their trades independently.
Consumers often claim that representatives provided ongoing guidance, but the Office said complainants almost never produce evidence of such advice. Without proof of regulated advice or a guaranteed investment performance, the Ombud is typically unable to hold platforms liable for losses.
A costly lesson: R1.3m gone in five months
A recent case shared by the Ombud underscores the risks. A consumer who opened an account after responding to a YouTube advert lost more than R1.3 million over five months trading in high-risk products. He alleged that platform representatives pressed him to continue trading and to deposit increasingly large sums.
According to the Office, the platform denied liability, citing the complainant’s signed acceptance of its terms, which expressly exclude the provision of advice.
Because the consumer could not present recorded or written evidence that advice had been given – and because he executed all the trades himself – “the Office was unable to make any finding that the platform was liable for the loss”.
Day trading: a completely different beast
The Ombud emphasised that day trading is not equivalent to long-term online investing. Traditional online investment platforms are designed for medium- to long-term growth. By contrast, day trading involves aggressive speculation on short-term movements in assets such as equities, currencies, commodities, indices, and contracts for difference.
The Office said that whether traders receive AI-generated insights, internal technical data, or bot-driven prompts, the information is speculative, not predictive. Tools such as leverage, margin calls, and stop-loss orders can rapidly magnify losses, and research indicates that most ordinary consumers endure “severe losses that have a significant impact on their financial well-being”.
How to protect yourself before entering high-risk speculative trading
The Ombud urged consumers to take a cautious, well-informed approach before engaging in day trading. Key recommendations include:
- Thoroughly research the realities of day trading and understand that the risks are high.
- Ensure you have strong technical knowledge of leverage, stop-losses, and margin calls.
- Treat unsolicited calls, messages, or emails promising quick profits with suspicion.
- Deal only with FSCA-registered entities.
- Use only discretionary funds that you can afford to lose – market risk is unavoidable.
- Be alert to pressure selling from brokers or consultants pushing you to invest more. As the Ombud noted, consumers should question why anyone who can reliably profit from day trading would spend time advising others instead of trading themselves.
- Record all interactions with platform representatives, whether telephonically or in writing.
Consumers who believe they have been financially prejudiced must first lodge a written complaint with the service provider. If unresolved after six weeks, they can escalate the matter through the FAIS Ombud’s online complaints portal, email info@faisombud.co.za, or contact the client care centre at 012 762 5000 or Sharecall 086 066 3274 for assistance.
