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Have You Ever Filed Complaint with Forex Regulator?

September 30, 2019 by

The regulation of Forex brokers is one of the most discussed topics in trader communities. It is also a topic of considerable importance because the safety from non-trading related risks depends mainly on the supervising authorities. According to a poll we had a few years ago, the vast majority of our visitors trade with regulated Forex brokers. Another poll suggests that about two-thirds of traders believe that online currency trading should have at least some regulation. At the same time, more than two-thirds of traders claim to have been scammed by a broker.

One of the responsibilities of a good government or independent regulator is to receive and act on complaints sent by the brokerage companies’ customers. Normally, a regulating institution has the necessary power to investigate and sufficient expertise to recognize a case of intentional misconduct, simple negligence, or technical issue on the broker’s part. Unfortunately, traders themselves have neither authority nor knowledge to tackle serious issues with the brokers without some kind of intermediation. Not all regulators accept and manage complaints directly — some cooperate with special dispute resolution systems (for example, the ASIC and the AFCA in Australia). This, however, doesn’t serve as a detriment to the successful resolution of a trader’s complaint as the Forex brokers are legally required to participate in such dispute resolution schemes (DRS).

Usually, a complaint resolution process (by a DRS or by a regulator itself) follows some predetermined pathway:

  1. Initially, a trader is advised to try to resolve the problem with the broker directly. Obviously, if some trader decided to go the complaint path, going to a broker can rarely bring satisfactory results.
  2. Negotiation process to assist both parties to come up with a satisfactory settlement. It doesn’t involve any enforcement, but the broker will usually get a glimpse of what happens if the complaint doesn’t get settled peacefully.
  3. Conciliation — a three-side meeting (or a telemeeting) to reach some kind of settlement.
  4. If both processes fail, a preliminary assessment of the complaint details is done by the complaints authority. This is usually non-binding and both parties still have a choice whether to settle the matters according to the assessment.
  5. Final decision is binding for the broker but non-binding for the trader. The latter may decide to pursue some other decision through courts. If the broker doesn’t act according to the final decision, the regulator will use its legal powers to enforce the decision. If it was the DRS that was handling the complaint, it will work with the actual regulator to enforce the decision.

Negotiation process could like this for example.

Evidently, sending financial complaints to authorities is quite popular among general population. For example, the aforementioned AFCA has received more than 35,000 complaints during the six-month period from November 2018 through April 2019. From my own experience, I have never faced the need to complaint against the brokers I traded with (unfortunately, the only brokers that I had problems with were unregulated). And how about your experience with complaining to authorities?

Have you ever filed a complaint with any FX trading regulatory authority?

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If you want to tell us your story of filing an official complaint and the broker regulator’s response to it, feel free to do so using the commentary form below.

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