New Zealand’s FMA notes rising number of investment fraud reports

Maria Nikolova

New Zealand’s Financial Markets Authority says the high number of investment fraud reports partially reflects its recent efforts to raise awareness about binary options scams.

New Zealanders continue to fall victim to investment scams every day and the government is looking for a way to put a stop to this trend. New Zealand’s Ministry of Business, Innovation and Enterprise is organizing a Fraud Awareness Week campaign, running until November 18, 2017, with the aim to prepare New Zealanders to learn how to spot scams.

The campaign happens as the Financial Markets Authority (FMA) announced that it recorded the highest number of monthly calls about fraud, scams and cold calls for more than two years in October 2017. According to the regulator, the high number of reports may partly reflect the FMA highlighting issues around binary options fraud as part of World Investor Week.

As FinanceFeeds has earlier reported, there are new requirements for companies offering short-duration derivative products, including binary options, in New Zealand. In its annual report for the year to June 30, 2017, the FMA confirmed that the new requirements will take effect on December 1, 2017.

“From December 2017, any company making regulated offers of short-duration derivative products to New Zealanders settling within three days, whether based here or abroad, will require a licence. All currently unlicensed providers must have applied for a licence by 1 August 2017.”

In April 2017, the FMA changed its approach to products such as binary options and contracts for difference amid rising concerns about the harm these unregulated offers of products pose for investors. Back then, the New Zealand regulator said that during the preceding 18 months, the volume of complaints about online FX and other short duration trading services like binary options had remained at about 40% of the total volume of complaints it has received. The FMA has also seen the increased emergence of online trading platforms, often based in overseas jurisdictions, targeting New Zealand investors with offers of short duration derivative products.

Consumer Protection Manager Mark Hollingsworth said:

“New Zealanders fall victim to scams every day. Netsafe data shows over 7,500 New Zealanders reported being scammed last year, losing a total of $11.7 million. Common scams include ‘phishing’ emails from scammers pretending to be from a trusted brand and cold-callers claiming they can ‘fix’ your computer”.

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