The UK Financial Conduct Authority (FCA) has just confirmed that all companies acting in or from the United Kingdom are prohibited from selling, marketing or distributing binary options to retail consumers.
Back in January 2018, the regulator has urged the public to be vigilant to the threat of online investment fraud, revealing that last year investors lost £87,410 per day to binary options scams.
The FCA’s rules are in substance the same as the European Securities and Markets Authority’s (ESMA) existing, EU-wide temporary restrictions on binary options. LeapRate reminds that ESMA has prohibited the marketing, distribution or sale of binary options to retail investors, as of July 2, 2018. However, the FCA is applying its rules to so-called ‘securitised binary options’ that were excluded from ESMA’s prohibition.
The FCA’s rules are permanent and come into force on 2 April 2019.
The regulator claims that the permanent ban on binary options could save retail consumers up to £17m per year, and may reduce the risk of fraud by unauthorised entities claiming to offer these products.
Christopher Woolard, Executive Director of Strategy & Competition at the FCA, said:
Binary options are gambling products dressed up as financial instruments. By confirming our ban today we are ensuring that investors don’t lose money from an inherently flawed product.
UK consumers should continue to be alert for binary options investment scams and should only deal with financial services firms that are authorised by the FCA.
The sale of binary options to retail consumers is now prohibited, thus any firm offering binary options services to retail consumers is likely to be a scam.