Australia’s AFCA terminates membership of USGFX
The Australian Financial Complaints Authority (AFCA) today said the now-bankrupt forex broker USGFX was disbarred from its lifeboat scheme.
The AFCA has permanently expelled USGFX from its membership after it was given numerous opportunities to rectify its shortfalls. Further, the move to pause complaints against the insolvent financial firm comes as the authority is awaiting details of the scope and timing of a compensation scheme of last resort (CSLR).
Clients of USGFX who submitted their claims before that date are still entitled to benefit from the complaints authority’s coverage. Nevertheless, from November 12 onwards, AFCA cannot accept any more complaints against Union Standard International Group Pty Ltd.
Established in 2018, AFCA is a non-government ombud service that protects the claims of covered clients and provides them with compensation in case their broker couldn’t meet its financial obligations. The authority provides a ‘one-stop-shop’ for individuals and small businesses to help with financial disputes.
USGFX has collapsed into administration amid an investigation by the Australian Securities and Investments Commission (ASIC) into its trading platforms. The ASIC had concerns that USG and its two representatives engaged in “dishonest and unfair conduct in the course of carrying on its financial services business in Australia,” including preventing customers from withdrawing money from their accounts.
The UK operation, USG UK, which is regulated by the FCA is not affected by this situation and continues to trade as normal.
USGFX troubles are not confined to Australia
In 2020, the board of USGFX announced that the headquarters of the brokerage were moved from Australia to London. Until recently, the UK and Australian entities that shared the same directors with the UK subsidiary are majority-owned by Myanmar-based, Hein Min Soe, who was also a director of the Australian business. However, Hien Min Soe stepped down last year as a director of the brokerage’s United Kingdom-based business.
The administrator has repeatedly blamed the Burmese owner of USGFX for the company’s troubles and dilemmas.
The Vanuatu-based entity of USGFX revealed earlier this year that the liquidator of its ASIC-regulated brand had sought to seize its assets outside of Australia. Despite being owned by the same person, the company reiterated that its Vanuatu brand is a separate legal entity that has been operating independently of the brokerage business currently under liquidation in Australia.
Additionally, USG Group claims that although it has no control over the liquidation process, it has been processing withdrawal requests for USGFX clients who transferred their accounts to its offshore company.
The brokerage added that it is still determined to retain its brand and global operations, regardless of its current situation and “rather than wasting money and resources on war of words.”