The UK’s financial watchdog, the Financial Conduct Authority (FCA), issued on Thursday a notice regarding a sharp increase in the number of consumer reports about unauthorized brokers in the country. The regulator did not provide any figures.
Scam firms promise attractive returns on investment, often sounding too good to be true. In many cases traders initially get some profit from the firm, but then payments stop and they never get their money back. In some instances, investors are asked to make additional payments in order to receive their profit.
In addition, many schemes are based on the so called broker cloning, where scam companies use the brands, addresses, license numbers, and other details of genuine brokers. They lure investors into trading with them.
Trading and brokerage firms often offer UK citizens trading services of forex, binary options, contracts for difference (CFDs), commodities and other instruments without having the authorization to do so by the relevant authorities, in most cases the FCA. Many of these firms provide UK addresses and claim to be based in the UK, when in fact they are not.
However, under the local regulations, investment companies are not allowed to target UK citizens and provide their products and services in the country, if they have no UK license, or license from another EU country. If a brokers is authorized in an EU country, it can operate in all other member states.
The FCA maintains a Financial Services Register, or a list of licensed companies that are regulated to meet its requirements and all other entities that are not included in the list may appear to be a scam.
Investors who trade with an authorized and regulated investment company highly reduce the risk of becoming a part of a fraudulent scheme and losing their investments.
We strongly advise you to only deal with regulated forex brokers, authorized by reputable regulatory bodies like CySec, FCA, and CFTC/NFA, among others.
Source: FCA
