Binary options trading has become surprisingly popular in the past few years, but unfortunately, every time the industry grows the number of scams related to it. The binary industry is no exception, and more and more traders have bad experiences with scam brokers.
Why Choose a Regulated Broker?
Even though some countries consider binary options the grey area in financial industry and are not sure how to categorize them, there is a great number of countries who gave their approval. Some see them as financial instruments, other as gambling. CySEC, or Cyprus Securities and Exchange Commission, is among the most renown regulatory bodies, as it is in charge for regulating binary options not only in Cyprus but EU as well.
List of regulated brokers can be found here.
There are many benefits of choosing a regulated broker, but the main is that customers have additional protection. All regulated brokers must follow a strict set of rules and laws in order to provide the service of binary options trading, but the most important, their work is also under constant surveillance.
This gives traders the opportunity to contact the regulatory body in charge for the broker, that will help them in returning their investment.
What to Do Before Filing a Complaint with CySEC?
Unfortunately, sometimes even regulated brokers rely on bad business practices. In order to prevent trading with a scam broker in the first place, make sure to sign up with a reliable and trustworthy broker. It is always recommended to trade with brokers from FBO’s Top List
In most cases, everything is fine until one moment, when a trader tries to withdraw funds. After signing up, trader sometimes gets a bonus and makes some money afterwards. After having a nice sum on the account, trader requests withdrawal and that’s when it turns out the broker is a scam. No replies, customer service that doesn’t care, emails that underestimate trader’s intelligence and asking for additional funds are among most common things that happen afterwards. There are also other practices that should be considered scams like cold calling, unauthorized bonuses or unauthorized depositing by using client’s credit card.
More about types of scams can be found here.
The same second one realizes there is suspicious behavior going on, it is advised to save all correspondence and make screenshots of the user account. It is highly recommended never to share them online, on forums etc. as brokers can easily change settings or T&C. Resist the urge and contact the regulatory body first.
How to Submit a Complaint with CySEC?
CySEC recommends always to contact the broker first, which is easier said than done. If the broker is still cooperative, make sure to let them know that you are familiar with your rights. CySEC is not investigating individual complaints, but is a regulatory body that supervises all brokers, and takes all complaints into consideration.
Many traders except fast reaction from CySEC, but keep in mind there’s bureaucracy involved and there are no quick solutions. Sometimes traders on binary options forums complain how slow it is, but be patient.
Dealing with a broker
CySEC advises dealing with the broker in the first place. CIF (Cyprus Investment Firm that is your broker) will give you a unique reference number. This number is important as it will be used in all possible future processes, and it is best to see it as ID of your complaint or problem. Make sure to state your full name, email, country, the cause of complaint, the financial instrument you’ve been trading and disputed amount. This detailed approach will protect trader as a customer as broker won’t have a chance to slip because of technical difficulties.
The broker is obligated to respond within five days and confirm that the complaint is received. Afterwards, the broker has a period of 60 days to respond the complaint in writing. The broker can inform you that complaint is successfully resolved or request more time (maximum 3 months from the day of complaint). More info on this procedure can be found here.
Conducting the Financial Ombudsman
It often happens that the trader is not happy with broker’s response or the lack of thereof. The next step is contacting the Financial Ombudsman. Financial Ombudsman is a mediator between the trader and the broker.
There are also many rules to follow while doing this step. The Ombudsman must be contacted within 4 months following the final CIF’s decision, as otherwise it will be impossible to make a complaint.
If trader files a complaint, there is a chance of financial compensation.
Taking Things to Court
Not many traders will be happy to hear this, but sometimes the last resort is a civil action in court. This process is usually time, money, and nerve consuming and doesn’t have to end in trader’s favor. It would be best to resolve all complaints in preceding steps, and it’s even better to prevent the entire scenario from happening.
Filing complaint about unregulated broker
CySEC gives traders the opportunity to report unregulated brokers as well. Unfortunately, in this case, there is no chance for a trader to get their money back as the company is not under the supervision of CySEC and civil action is the only possibility to get compensation.
This action can, however, help other traders to protect their money from foul brokers. Just like all other regulatory bodies, CySEC publishes occasional warnings about scam companies, so if you direct their attention towards bad broker it can be helpful for other traders and investors, as well.
This type of complaint can be submitted here.
What are the Alternatives to CySEC?
When such situations occur, it is easy to feel helpless and frustrated. It is important never to give up, as there are few other things every trader can do, in addition to filing a complaint with CySec.
Reaching out for Other Regulatory Bodies
Visit the broker’s website and see where exactly it is regulated. Some brokers are regulated with more than one body, so besides CySEC, it can also be regulated by AMF (France), IIROC (Canada), ASIC (Australia), CONSOB (Italy) etc.
List of all regulatory bodies and how they work can be found here.
Fighting the battle against scam broker on more fronts can be more successful than relying only on one regulatory body. Keep in mind that different bodies have different procedures when it comes to filing a complaint and some are reacting faster than the others who are drowned in bureaucracy
Fair Binary Options was created with the mission to create a safer trading environment for traders from all around the world. We already helped many traders dealing with foul brokers who couldn’t get their money back, but also blacklisted brokers who were demonstrating the unethical or suspicious behavior. FBO has zero tolerance for scam brokers.
We always like to help our readers, and members of the FBO community have priority when it comes to providing help and advice. Make sure to register and become a member in order to protect your funds and succeed in trading.