The mystery shopping tour was focused on online trading companies authorized by CySEC.
France’s financial markets regulator AMF has just posted the results of its latest FX/binary options mystery shopping tour. The regulator has already conducted such an experiment back in 2014 but in 2016 its efforts were focused on online trading companies authorized in Cyprus. This reflected the fact that the number of complaints regarding CySEC-authorized Forex and binary options firms received by the French regulator remains high.
The latest mystery shopping tour was conducted between August and December 2016. Initially it targeted 15 companies offering Forex and/or binary options services but 3 of these refused to accept French clients (a positive sign for them), so the mystery shoppers tested 12 companies. The shoppers checked the content of websites, including advertising, the opening of accounts, transactions, verification procedures, client questionnaires, the actual trading, the customer support, as well as the possibility to close the account and withdraw funds.
KYC practices have improved: all of the companies offered their prospective clients a questionnaire to assess his/her investor aptitude. However, all of the questionaries were auto-evaluation ones and it was up to the investor to decide whether he/she is fit to trade a given product. On the good side, if a trader admitted he/she was a newbie, all of the companies posted a warning message preventing the prospective client from trading.
There was some progress made in terms of less aggressive advertising on websites. On the downside, however, the advertising of FX/binary options education was often misleading. Half of the tested companies did not in fact provide the education services advertised. Moreover, the information was not adapted to the level of knowledge of the specific client.
Regarding trading, the conclusions are dull. Investors rarely if ever had an idea what sum they risked when they placed an order. Often, operations were executed within one click, preventing traders from verifying the trade.
All of the mystery clients managed to withdraw their funds and close their accounts without any problem.
The rather optimistic inferences drawn by the French regulator from the latest mystery shopping tour in 2016 are in contrast with the gloomy findings by FinanceFeeds’ check of the latest version of the AMF blacklist of binary options companies targeting French investors without having the necessary permission to do so. FinanceFeeds has found that there are at least 63 websites (20% of those blacklisted) that illegally target French investors, in the face of being included in the blacklist. Some 80% of the blacklisted websites are now inactive.
A swift reminder: The mystery visits conducted by France’s AMF in 2014 targeted 29 companies offering Forex and/or binary options trading online. The AMF check back then showed that often no ID was required to open an account and trade. There were also difficulties to withdraw funds – only 2 of the mystery clients that managed to open an account succeeded in getting their money back.#Binary Options Brokers, #cysec, #Financial Markets Authority AMF, #Forex Brokers