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Screenshot of a breaking news alert e-mail from Q2 2017
The long arm of Australian law… Australia’s financial regulator ASIC has settled with US-based online trading firm Interactive Brokers (NASDAQ:IBKR) on an agreement which will see IBKR refund $1.5 million in fees and commissions to its Australian clients which were granted margin lending facilities between 2010 and 2013.
IBKR made margin loans to Australian clients despite not holding an Australian financial services (AFS) licence, required for the provision of margin loans.
ASIC was also concerned that IBKR did not comply with its responsible lending obligations when issuing margin loans, by not verifying customers’ financial information. Approximately 3,000 retail customers took out a margin loan with IBKR during the noted period.
Interactive Brokers will also pay $100,000 to the Financial Rights Legal Centre for the purposes of consumer education concerning financial services and consumer rights in Australia.
The company has agreed to engage PricewaterhouseCoopers, to check that the customer refunds have been calculated and paid in accordance with a methodology agreed between IBKR and ASIC.
ASIC Commissioner Greg Tanzer said:
Margin loans come with unique risks and will not be suitable for all consumers. It is therefore important that they be provided by appropriately licensed or authorised companies. Providers must also comply with their responsible lending obligations when issuing margin loans.
Interactive Brokers entered a ‘voluntary undertaking’ with ASIC in August 2013, and agreed not to issue any new or increase any existing margin loans. IBKR also wound down the facilities, and is not currently offering margin lending facilities to retail clients in Australia
To see the ASIC press release on the matter click here.