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Screenshot of a breaking news alert e-mail from Q2 2017
The UK Financial Conduct Authority (FCA) has reported a sharp rise in reports about unauthorised trading and brokerage firms.
The complaints from consumers concern firms offering trading in foreign exchange, contracts for difference, binary options and other commodities. A common feature of such companies is that they promise artificially high returns and often mention “guaranteed profits”.
The regulator notes that firms offering these types of services in the UK in general have to be authorised by the FCA. However, many of the firms reported to the watchdog are not authorised by the FCA but claim to be based in the UK and often provide a prestigious city of London address. In reality, they have no physical presence in the UK and are not based at the addresses they provide.
Most consumers have reported that they initially receive some returns from the firm, then they are encouraged to invest more money and at this stage or soon after, the returns stop, their account is suspended and they become unable to establish any contact with the firm.
The watchdog notes that if consumers wish to trade in high risk investments such as Forex and CFDs, they should make sure to only deal with FCA-authorised firms.
The regulator specifically mentions clone firms, which use use the name, ‘firm registration number’ (FRN) and address of firms and individuals authorised by the FCA to suggest they are genuine.
The FCA encourages consumers to verify the identity of an authorised firm, that is, to ask for their FRN and contact details, but always call them back on the switchboard number given on the Register. If there are no contact details on the Register or the firm claims they are out of date, consumers should contact the FCA Helpline on 0800 111 6768.
The regulator also notes that consumers should access the Register from our website – https://www.fca.org.uk – rather than through links in emails or on the website of a firm offering an investment.
The watchdog warns that clients who deal with an unauthorised firm will not be covered by the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.
You can view the full text of the warning by clicking here.