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Broker Regulations - Complaints & How to Secure Ourselves?

  • #1
  • First Post: Sep 2, 2014 12:11pm Sep 2, 2014 12:11pm
Hi
We all know it is better to use a regulated broker, but we also know some regulators provide more protection than others.
Therefore, without peers reviews, it is difficult to tell if a broker is trustful or not (even some peer reviews are not trustful.)
In this post, I can share some very basic things, and also wonder the answers to some questions.
I hope some experienced traders/brokers here can share some thought and opinions.

- Regulator and compensation scheme
In general, there are few well known regulators:

FCA, UK, http://www.fsa.gov.uk/register/firmSearchForm.do <- from here, you can double check broker's license
It provides compensation scheme (FSCS): http://www.fca.org.uk/firms/being-re...nisations/fscs

ASIC, Australia, http://www.asic.gov.au/
I am not sure if it provide compensation protection

CySec, Cyprus, http://www.cysec.gov.cy/default_en.aspx
I find this list, http://www.cysec.gov.cy/licence_members_1_en.aspx, but I cannot find a solid search engine on CySec website to search license number.
If someone finds it, please share.
It was said CySec provide EUR 20K compensation fund as a protection, but I dont find its details too, so if someone finds its official page, please share.

NFA, US, http://www.nfa.futures.org/
To search registered firms, http://www.nfa.futures.org/basicnet/
I am not sure if there is any compensation fund protection either.

[Question] How to complain
It is said some regulators provide fund protection, so when things go wrong, retail traders can have some safe net.
But it is really unclear to me how things should proceed if really anything goes wrong.

In this post: http://www.forexfactory.com/showthre...=296316&page=4

Quoting Takisd
{quote} Reporting to ASIC doesn't work if you haven't been through FOS. To get to FOS you need to go through the proper complaints system of the brokerage firm. I am unsure which broker but I will give a general outline of how the complaints system works. - You file a complaint with the complaints department where a complaints manager is set to handle the case. All this must be in writing, and documented. You should allow at least 2 weeks for the complaint to be finished with the complaints manager. If the complaints manager doesn't handle the complaint to your satisfaction: - You file the complaint to the directors/a director of the company in writing. The director also will take 2 weeks to finalize a written response. If you are not satisfied with the response, you gather these 2 written complaints and pass them to the ombudsman. FOS will charge the company to which there is a complaint to open a case. I'm not sure how much it is today, but it used to be a few grand. FOS will then come to a conclusion on the matter. If FOS were to ignore you completely (no correspondence) then you could go to the police or ASIC. The only reason FOS wouldn't listen to your initial claims is if you have not documented completing the complaints proceedure. Australian regulation is not a knee-jerk regulation. There is process, and its a brokers job to indicate the process should you request to file a complaint. After being a broker for a few years, I can tell you that the majority of complaints are problems with the clients side. Latency, mistakes on orders, not knowing what they are investing in are a few of the problems faced daily by complaints managers. If you have screenshot evidence of a broker scamming, all you need to show to the authorities is that you tried to settle the dispute with the brokerage firm. If the brokerage blatantly ignored you, they will rule in your favor.
Takisd shares how one should complain to ASIC.
But does anyone know about other cases? (FCA / CySec / NFA)

It seems to me that it is very likely if we, as a retail trader, submit some complaint to regulators, our complaint will be ignored if it is not done in a right way.
So, even with fund protection, it is meaningless.
I hope some people can share some thoughts, or even some personal experience.

[Question] How to be re-fund by the compensation fund.
I guess that must be through complaint first, and long long time process, and then if things are really bad, and the regulator may re-fund that.
Does anyone hear about any case like this?


[Question] Licensed v.s. Regulated
In this post: http://www.forexfactory.com/showthre...=296316&page=5
JoBlo also shared some thoughts
Quoting JoBlo
{quote} Not only Licensed....but make sure they are Regulated by the particular authority, just because a broker is registered/licensed with a particular authority, it does not mean that they are necessarily regulated/governed by that authority..
But what is the difference? And how can we tell the difference?
On the regulator website, it is only provided with license number, is there regulated number?
If so, brokers need to provide both license number and regulated number. Or regulated brokers have different number compared to licensed broker?
This really confuses me.

---

Overall, after some research and studies, I don' find a complete information about "how to complain" to regulator.
Even the licensed / regulated is confusing.
It is always at "we are regulated" stage.
But when things go wrong, how should we do ? (and clearly, direct complaint may be useless.)
(call the police? well, many brokers are over-sea, even if they are regulated, so it is unlikely to really do something on them.)


I hope some experienced traders/brokers can provide some information.
Cheers, Wjack
  • #2
  • Sep 3, 2014 4:20am Sep 3, 2014 4:20am
just some supplement:

FSP, New Zealand, http://www.business.govt.nz/fsp
It has fund protection scheme FDRS, http://www.fdr.org.nz/. It is said up to 200k NZD.
However, I have no idea how effective it is.
(For example, I am not sure if it is only protective for NZ residents? Or its protection only cover some, but not all, brokers?)

---
Also, I read some people also questioning if these fund protection scheme (by FCA, CySec or FDRS) only protect their residents?
I will find it out, but if anyone know it, please share (and provide reference).

I hope this discussion will be helpful for many other people.

Cheers, Wjack
  • #3
  • Sep 3, 2014 3:04pm Sep 3, 2014 3:04pm
just some more update.

According to FDRS's reply to me, FSP and FDR provide NO physical legal protection for clients of registered brokers.
The number of "200k USD (not NZD)" is the maximum number FDR can sentence to the broker if it is confirmed breaching some regulations and needs to make some make-up to clients.
However, FSP and FDR have NO legal force on brokers to ask them really pay out that money.
What they can do at most is to Remove them from their registered list. <== well...it seems to be their best punishment.

Please correct me if I am wrong.

Therefore, FSP and FDR licenses are like a piece a useless paper.
*NFA and FCA seems to be more trustful, but I am not sure how helpful they can really be.
*I am not sure how much physical protection they can provide either.

Cheers, Wjack
  • #4
  • Sep 3, 2014 7:30pm Sep 3, 2014 7:30pm
The FSCS (Financial compensation scheme) in the UK actually does compensate clients should a broker become insolvent. There have been a few cases in the last 10 years, and they did infact pay (up to GBP 50K per account, if i remember correctly).

Personally i only use UK firms for this reason.
  • #5
  • Sep 4, 2014 3:19am Sep 4, 2014 3:19am
@Wjack: So you complained to FCA about LMAX behaviour of rejecting your orders despite everything they say and advertise ?
  • #6
  • Sep 4, 2014 3:41am Sep 4, 2014 3:41am
to Mevo:

No, I didnt do so.
Their rejection of my orders were due to "suspended market", which is the right they reserve, and this is written on the clauses, so there is no any standing point to file a complaint.

For the regulators, I DONT expect that they will help much to force brokers to provide "fair" environment.
What I DO expect from regulators is, at least DONT allow registered members steal my money by disappearing or going insolvent.
(That happened on some brokers in some doubtful countries, but actually NZ /AU license now seems to me that it has this possibility as well.)

Brokers can probably still be able to "steal" money by some "unfair" behaviors, like vicious pricing, slippages, tricks etc.
For that part, it is difficult to find solid evidences.
Fortunately, this part of loss can be controlled, and we can simply stop trading and still keep our deposit.

Cheers, Wjack
  • #7
  • Sep 4, 2014 4:32am Sep 4, 2014 4:32am
Quoting Wjack07
What I DO expect from regulators is, at least DONT allow registered members steal my money by disappearing or going insolvent.
Oh, like MF Global you mean ? Sure.

Quote
Brokers can probably still be able to "steal" money by some "unfair" behaviors, like vicious pricing, slippages, tricks etc. For that part, it is difficult to find solid evidences.

If regulators were really there to do what they are supposed to, they could very easily open accounts with "regulated" brokers with one of their employee identity and test a little to see how things go... Anyone of us is able to see tricks when there are some, and it's very easy to program a little EA to test a broker. The regulators don't see anything because they don't look and have no intention to do so.

Anyway, I find your post pretty amazing considering everything we discussed privately.
  • #8
  • Sep 4, 2014 7:48am Sep 4, 2014 7:48am
Oh, another question here is,
If one firm is settled in country A, but gets a license in country B, how comes the legal authority in country A can extend to country B?
This is very common.

Even for FCA, some firms are not in UK but having FCA licence.
I am not sure in this case, if FCA still provide the 50k GPB compensation, and if FCA can literally regulate this member.

*I have emailed to FCA, but apparently their procedure speed is slow. Hope anyone knowing details can provide some comments with reference. And I also hope this information would be helpful for people.

Cheers, Wjack

--
to Mevo:
It is true that regulators can put efforts in and then likely spot on some doubtful behaviors, but I am also doubt if that is really the case (at this point, I agree with you.). So I don't expect or even rely on regulators to fully support the "fair environment".

In my opinion, regulators is the step one, and it should have at least the bottom line protection.
And then, peer reviews are important.
Brokers, no matter making profit from whatever method, needs clients, so they wouldn't like seeing bad comments and posts against them.
So peer reviews can have pressure on brokers to an extent.
To the third level, actual testing is important, and to build up reliability gradually.

In this post, my intention is to discuss the regulators part for detailed issue :
(1) Difference between licensed and regulated.
(2) What is the correct way to complain (as my main post, it seems not as easy as directly reporting.)
(3) Compensation scheme ? (besides FCA)

--
to Shrike:

Would you be kind to provide references to these cases? I would like to check them.
  • #9
  • Sep 4, 2014 8:52am Sep 4, 2014 8:52am
Worldspreads is the last one i remember. Here is a blog of a client: http://worldspreadsheist.blogspot.co.at/

I believe there was at least one other case in the last few years, but i cant remember the name. According to the fscs news page, they payed out GBP 243 million to clients in the last year. Most of it not trading related, but it shows that they are an adequately funded compensation scheme.
  • #10
  • Sep 4, 2014 9:01am Sep 4, 2014 9:01am
Hi Shrike:

Many thanks for the link. It is helpful.
This also gains more of my credits on FCA.

Cheers, Wjack.
  • #11
  • Nov 3, 2014 2:08am Nov 3, 2014 2:08am
Dear all

I have an account with 24winner .. www.24winner.com ( winner option before they change the name) which are CySEC regulation and I have got problem with payput% as I got different payout than other traders and that continue more than a week and evey time I have chat them they said they face problem but I can beleive them. why? because I have open different account by my wife name and when I log in the payout% is 85% while if I log by my name on same time and using same PC the payout dropped to 70% ? it make sense !! SO I have applied for a complain to them provide a screen shoot of both accounts, but they said its market situation !! that situation continue more than week on my acc only while my wife acc is ok .. ??

Then I decide to apply for a complain to Cysec and I have applied since 2nd of october and get an email from the 24winner that they got the complain from cysec and until now no response no solution from both 24winner and Cysec too !!!

Can some one advised me where I can complain on both . . HaHa
  • #12
  • Nov 3, 2014 2:25am Nov 3, 2014 2:25am
Ammar: Take all your money out of the broker and leave ! What do you want to complain for ? So that this is fixed and you continue with them ? You saw they are dishonest, don't continue. If you filled a complain with Cysec, that's good. You can spread the word around on forums and FPA for others to not work with them, that's the best to do. Don't expect too much from a regulator.
  • #13
  • Nov 3, 2014 3:34am Nov 3, 2014 3:34am
Quoting Mevo
Ammar: Take all your money out of the broker and leave ! What do you want to complain for ? So that this is fixed and you continue with them ? You saw they are dishonest, don't continue. If you filled a complain with Cysec, that's good. You can spread the word around on forums and FPA for others to not work with them, that's the best to do. Don't expect too much from a regulator.
At moment I have not trade with them but I asked for $900 as different in payout and waiting for solution from cysec but as I mentioned it takes more than month and no response from broker
  • #14
  • Nov 3, 2014 3:53am Nov 3, 2014 3:53am
This should help http://www.fxstreet.com/brokers/regu...organizations/
  • #15
  • Nov 3, 2014 4:49am Nov 3, 2014 4:49am
Somehow I feel a bit responsible for this...in a way that this discussion chain I brought up implying some credits on regulators, which is a dangerous thinking.

I totally agree with Mevo, and DO NOT rely on/expect regulators.
Even if with the compensation scheme (FCA / CySec),
it may takes ages and effort to get money back (email bouncing, evidences providing, brokers excuses or even just no reply.)
Regulators are usually slow on responding.
(They don't have the incentive to act quickly ! I dont think they are motivated to fight for the fairness of trading activities.)

The only reliable way (in my opinion) is to find a broker with sufficient positive reviews (you also need to rule out those positive reviews by brokers representative).
With enough number of clients who are happy with them, brokers are less likely to do serious bad thing to damage their brand and lose their clients.
It is like to let the market/community to rule out those bad brokers for you.
I believe there are some brokers meeting this criteria.

There are many doggy brokers, try to avoid them.
Sometimes, I also find some brokers without reviews but with some interesting features, and then tried/trying them,
but you just need to do some homework, and then take the risk (prepare to lose everything.)

Just sharing some thoughts, Cheer, Wjack.
  • #16
  • Nov 3, 2014 5:07am Nov 3, 2014 5:07am
Anyone confirm where the FSCS in the UK has not paid out to a customer who lost money in a FCA regulated UK broker, in the past.

I mean when the broker has gone bankrupt.
  • #17
  • Edited 6:45am Nov 3, 2014 6:22am | Edited 6:45am
I am also interested in knowing this information.
However, even so, it doesn't mean "FCA regulated" is the thing you can fully bet on.
(you need to count in the time and effort to get money back when things go wrong.)

btw just want to point out:
Some "FCA regulated" brokers are not in the UK (for example, in Cyprus or some other places), and FCA has no full authority on it.
In this case, many of them choose not to join FSCS (FCA compensation scheme) because this is not compulsory for them and also cost them quite some money.

Cheers, Wjack
  • #18
  • Nov 3, 2014 6:41am Nov 3, 2014 6:41am
Well the FSCS has a pot of money paid for by a levy on it's members. When a member goes bankrupt the FSCS pays out. Problems will arise if the member that goes bankrupt is so large it's bigger than the pot of money the FSCS has. Do they impose another levy or just pay out a percentage.
  • #19
  • Last Post: Nov 3, 2014 7:39am Nov 3, 2014 7:39am
I don't know about compensation, but one of the trick I know about so called "FCA regulated" brokers is that some Cyprus brokers create a sister company or branch in the UK which acts as an IB (introducing broker) for the main company. They then register with the FCA, but only as an IB ! And after, they advertise "FCA regulated", which is very partly true and won't give you the benefit of the compensation scheme. If you seek the protection of the compensation scheme, check this point out !
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