French investors complain of harassment, psychological manipulation by Cypriot brokerages
All of the complaints received by France’s AMF Ombudsman Office in 2016 that referred to draining of accounts, psychological manipulation and harassment concerned firms regulated by CySEC.
FinanceFeeds has just reviewed some stunning data from France’s regulators with regards to complaints from French residents last year.
The Annual Report for 2016 by AMF’s Ombudsman Office shows an overall drop in complaints against binary options and FX brokers but it is the nature of complaints that is the source of concerns. Investment firms regulated by the Cyprus Securities and Exchange Commission (CySEC) are, according to the complaints received by the Ombudsman, harassing investors.
Let’s check out the numbers. In 2016, the AMF Ombudsman received 56 complaints against unregulated online trading companies, that is, companies providing binary options and/or Forex services without the necessary permission. This marks a drop from the 89 such complaints received in 2015. The Ombudsman notes, however, that her powers do not cover unregulated businesses.
However, the Ombudsman may review complaints with regards to EU-registered businesses. In 2016, the AMF Ombudsman Office received 116 complaints against Forex and/or binary options firms regulated in an EU jurisdiction. This is down from 139 complaints in 2015.
The bulk of complaints – 83%, concerned companies regulated by CySEC. A number of complaints alleged psychological manipulation, harassment and draining of investor accounts – all of them were against CySEC-regulated brokers. With regards to psychological manipulation, the Ombudsman stresses the strong effect of advertising of high-risk financial products by football clubs and the terrible effects of aggressive phone calls.
The Ombudsman does not mention any particular company names but stresses that half of the complaints targeted five companies.
Another grave finding is the rise of the average sum lost by investors who filed complaints – half of the complaints referred to losses exceeding EUR 5,000. This also points to a change in FX and binary options sales tactics, as sales teams now target potential clients with bigger sums to invest.
The losses reported in the complaints concerning regulated entities exceed EUR1 million. The Ombudsman managed to help investors recover EUR823,733 last year.
The Ombudsman notes the ban on advertising of high-risk financial products such as binary options thanks to the Sapin 2 law but adds that unregulated firms are now simply moving to other sorts of offerings, like diamonds and rare earths.
