The Financial Conduct Authority (FCA) has penalised Cyprus-based broker Forex TB £276,100. This decision comes after findings of unfair customer treatment and unauthorised investment advice.
Although initially set at £1.215 million, the fine was reduced to prevent significant financial hardship for Forex TB.
The FCA uncovered that Forex TB coerced customers into engaging in high-risk activities such as contract-for-difference (CFD) trading. This form of trading permits betting on market fluctuations without owning the underlying assets.
The investigation revealed that many customers, inexperienced in trading, were recommended to seek loans from friends or family, elevating their financial risk.
Furthermore, the company often gave investment advice without authorisation, as highlighted by the FCA’s detailed review.
Forex TB’s actions led to customers being misinformed about the risks involved. Novice traders were particularly vulnerable, lacking the necessary understanding of CFDs.
By misrepresenting their status as ‘Professional Clients’, customers lost important protections.
This misclassification allowed Forex TB to bypass consumer safeguards usually granted to retail clients.
Following the FCA’s directive, Forex TB halted all operations related to UK consumers in April 2021.
As of October 2023, Forex TB does not hold any FCA permissions.
Therese Chambers, FCA’s enforcement director, emphasised the gravity of the misconduct, noting the exploitation of vulnerable customers.
Initially set at £1.215 million, the fine was reduced after Forex TB demonstrated that such an amount would cause severe financial strain.
The FCA considered this appeal and adjusted the penalty accordingly.
The revision illustrates the regulator’s commitment to fair administrative processes while maintaining stringent compliance expectations.
Forex TB stopped engaging with UK clientele from April 2021, reflecting the FCA’s intervention.
Prior to this, the company had multiple engagements with UK customers, providing unauthorised advice.
By halting operations, the firm has severed connections with the UK market to comply with FCA regulations.
Industry experts suggest such penalties are crucial in maintaining market integrity. They reinforce the necessity for brokers to adhere strictly to regulatory standards.
The case of Forex TB serves as a cautionary tale for other firms operating in similar domains.
Adhering to compliance norms is vital to prevent actions that could potentially harm customers.
The FCA’s actions highlight its proactive approach in safeguarding consumer interests.
Moving forward, brokers are expected to comply with enhanced scrutiny and adherence to market regulations.
The FCA’s actions against Forex TB underscore the regulator’s role in ensuring market fairness. Unauthorised practices face serious repercussions, deterring potential misconduct.
