From reading your posts I can understand that you've previously placed a certain amount of faith in the conduct of your provider and that this recent event represents a change in your experience of their business practice.
As such, you were likely caught off guard. However, when it comes to challenging the legality of sudden changes in a provider's business practices (and the failure of that provider to alert you to those changes in a timely manner), the outcome will usually depend on what is legally demonstrable.
The documented terms and conditions ,as agreed when the account was opened (and perhaps amended from time to time), will likely become the legal fallback position of the provider in any dispute that arises.
It is my understanding that two things would need to be demonstrated to the satisfaction of the FOS (or other body legally empowered to act in this matter), namely, you would need to demonstrate that the FSP's conduct was in breach of the client agreement and also demonstrate that any financial losses suffered were consequent to the aforementioned breach of agreement. Failing this, the best that I can suggest is to find a more suitable provider for your future trading activities.
Based upon my experience to date, it would be nigh on impossible for an average retail trader to achieve a favourable ruling. For those whom disagree, just take a closer look at the terms and conditions that one must consent to before the provider even allows the trading of their products. (Yes! The wondrous fairy tales depicted by the glorious marketing promises and glamorous advertisements start to look more like nightmarish horror stories once one becomes acquainted with the true financial ramifications of certain clauses embedded within voluminous PDS and client agreement documents!)
I understand that you probably feel betrayed by your FSP, and frustrated by the absence of any viable legal remedy. I can assure you that you are by no means alone in such sentiments!
Expressing your intense disgust to trusted friends and relatives might help alleviate some of your angst and restore some sense of empowerment. (This might also serve to forewarn a few people and help them avoid a similarly unsatisfactory experience!).
Incidentally, you are to be congratulated on your forbearance in choosing not to disclose the name of the offending FSP. I envy your capacity for self restraint. I have been somewhat more blatant in my public expressions of contempt for one of the major providers! (Fortunately, I haven't attracted a defamation suit!)
Current Australian laws seem to be sufficiently liberal to legally allow a vast array of unscrupulous behaviours within the financial services industry. Consequently, I have some sympathy for the FOS. They are in the unenviable position of often having to deliberate on matters where they cannot legally rule in favour of the client despite being able to recognise ill treatment on the part of the FSP.
ASIC, on the other hand, have much to answer for. I've often expressed my contempt for their shortcomings on this forum, particularly with respect to them allowing the inclusion of very generous clauses thereby enabling unscrupulous providers to profit by betting against and sabotaging their clients!
To be forced into margin, outside of market hours, and then closed out of trades based upon a materially inferior and invented price, would normally seem unjust. However, as I've already mentioned, these providers have it all "legally" sewn up from the outset . ASIC has done precious little (if anything) to prohibit such unseemly business practices.
I know that it will be of little consolation, but I've included a link to an FOS' response to an ASIC submission. I was personally heartened when I read it, largely on account of it demonstrating an awareness of some of the key issues that need to be addressed before we can have any real confidence in the integrity of the OTC CFD industry. I like to believe that this and other situations may have been prevented had ASIC chosen to recognise and enact FOS' suggestions.
http://www.fos.org.au/home-page/search-results/?orderby=rank&rpp=10&rst=All&str=ASIC+CP+146&type=and&xcid=181