Binary options dominate consumer enquiries received by Belgium’s FSMA in 2017
The Belgian regulator received 792 complaints about financial fraud in 2017, up by 45% from the previous year.
Binary options continue to dominate the spectrum of consumer complaints in Belgium, although the country was among the first to react decisively against such scams. According to the latest numbers published by the Financial Services and Markets Authority (FSMA) earlier today, the regulator received 1,710 notifications from consumers about various financial matters, up 13% compared to 2016.
Nearly half of the enquiries were questions or complaints relating to fraud and unlawful offers of financial products and services. There were 792 such messages in 2017, up by 45% compared to the previous year.
The messages reporting fraud or unlawful offers mainly concerned binary options, boiler rooms, pyramid schemes and ‘phishing’. New topics in 2017 included credit fraud, virtual currencies and fraud with investments in diamonds.
Number of messages:
- Pyramid schemes: 169
- Binary options: 164
- Boiler rooms: 118
- Phishing: 71
- Diamonds: 53
- Credit: 38
- Virtual currency: 33.
The regulator explains that the increase reflects in part the growing number of warnings issued by the FSMA about fraudulent activity. Consumers asked questions about the warnings or reported having been victims of fraud. The implementation of the ban on distributing certain derivatives to retail investors also prompted additional consumer questions, the regulator notes.
The FSMA published 116 warnings last year, up 70% from 2016. The FSMA issued 46 warnings about boiler rooms, and 42 about fraud with binary options. It issued its first ever warning about alternative investments, fraud with investments in diamonds and fraud with initial coin offerings (ICOs).
In the meantime, the European Securities and Markets Authority (ESMA) has opened a consultation on proposed new rules for CFD and binary options offering. With regard to binary options, the regulator is considering a prohibition on the marketing, distribution or sale of binary options to retail clients. ESMA considers to adopt this measure as the significant investor protection concerns relating to this product are due to inherent features of the product that are unlikely to be sufficiently addressed through certain restrictions on the product (such as minimum duration contract periods). In particular, the pricing structure of the product means that, on average, investors will experience negative expected returns without providing any clear compensating benefits to retail investors (e.g. the hedging function served by vanilla options). The alternative option of a total ban that would include professional clients is not under consideration due to the lack of evidence of harm to this type of client.
