FCA pledges to regulate binary options after scams
The UK’s Financial Conduct Authority (FCA) has announced plans to regulate binary trading after a rise in complaints and reports of scamming.
At present, the UK Gambling Commission (UKGC) oversees regulation of activity related to binary trading, but as of January 3, 2018, this responsibility will pass to the FCA.
The FCA will authorise and supervise companies involved in this sector, while individual complaints can be referred to the Financial Ombudsman Service and consumers will have access to the Financial Services Compensation Scheme.
However, the FCA has also warned that these protections will not compensate for any losses from trading and advises consumers to be “careful” and “consider whether the products are right for you”.
The change in responsibilities comes after almost 700 people reported losing a total of more than £18bn (€20.1bn/$23.6bn) on binary options scams in the first six months of this year, according to the Reuters news agency.
Last month, police in London raided various offices in the English capital as part of a broader crackdown on investment fraud.
“Be wary if you are contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true,” the FCA said in a statement.
“Check the FCA Register of financial services firms; if a firm does not appear on the register and is not licensed by the Gambling Commission then the best option is to not to trade with that firm, transfer funds, or provide any banking details.
“We strongly advise you to get independent professional advice before paying any money to a firm offering binary options.”
The FCA has been pushing for stronger regulations over binary options trading and contract for difference (CFD) products for some time.
Last December, financial trading companies lost almost £2bn in one day after the FCA proposed a new set of rules for companies selling CFD products to retail customers in an effort to improve standards across the sector.
Related article: Financial betting firms lose almost £2bn after FCA proposals