In City Index Ltd (trading as Finspreads) v Balducci [2011] EWHC 2562 (Ch) the Court considered whether a claimant could claim under sections 20 and 150 of Financial Services and Market Act 2000 (“FSMA”) against a spread betting firm; in this context it considered appropriateness and suitability issues and determined whether the firm had provided unauthorised advice. The Court ruled that an experienced trader, trading in knowingly high risk activities, could not seek to avoid liability for debts he have amassed as a result, despite his claims that these debts had arisen purely from “unauthorised advice” provided by the spread betting company.


The claimant provided customers, such as the defendant, with the opportunity to undertake spread betting in financial derivative products. The defendant engaged in this activity, amassing debts in excess of £300,000 from betting on the price of heating oil.  

The claimant issued proceedings to recover these debts; the defendant counterclaimed under sections 20 and 150 of FSMA, alleging that he had accrued these debts by reason of unlawful advice that had been given to him by the claimant. (Section 20 confers a remedy when a firm gives unauthorised advice to someone who has suffered loss as a result, whilst section 150 provides that an action for damages lies where there has been a breach of an FSA rule and someone has suffered loss as a result.)  

The Court’s decision – the claimant’s claim

The Court found that the claimant, who provided an execution-only service, had not given investment advice or made investment recommendations (as it was prohibited from doing under FSMA). The Court held that the claimant had successfully proved its case and was entitled to recover the outstanding debt from the defendant.  

The Court’s decision – the counterclaim

In his first counterclaim the defendant argued that he was unaware of the scope of activities he was engaging in, or that the claimant was providing an execution only service. The Court found on the evidence before it (including the contract between the claimant and the defendant), coupled with the defendant’s extensive prior dealings (he had spread bet for 2 ½ years and made over 900 similar trades), that the claimant had not breached the FSA’s Conduct of Business Sourcebook and therefore the defendant had no cause of action against the claimant pursuant section 150 of FSMA.  

In the second counterclaim the defendant argued that, despite offering execution-only services, the claimant had in fact provided the defendant with specific investment advice on which he had relied and that this constituted a breach of section 20 of FSMA. The Court however found that there was no evidence that the defendant had ever relied on the claimant’s “advice” and had in fact on one occasion acted contrary to the claimant’s general comments. Furthermore, the Court determined that the defendant was well aware that the claimant’s service was execution only. Accordingly, the judge held that “not only was there no advisory relationship but … Mr Balducci did not regard the relationship as an advisory one”.  

Therefore the defendant’s counterclaim failed