Challenges for existing resolution channels

Financial Commission has compared approaches that are available for brokers registered in both highly regulated jurisdictions such as in the U.S., as well as progressive evolving places such as New Zealand, and has observed that each jurisdiction has its own advantages and limitations, whether in Australia, Singapore, or Cyprus, as an example.

There doesn’t appear to be a single universal solution or panacea available that equally helps both clients and brokers in a manner that is both cost-efficient and effective when it comes to resolving customer complaints. Yet, this is where the Financial Commission is able to provide its greatest value, because retail forex, CFD and binary options products make up the industry that it was designed to support.

Dispute resolution comparisons

Many Jurisdictions require brokerages to become regulated in order to carry out financial services activities from within their country and to domestic clients, and in some cases allows one but not the other (i.e. soliciting foreign clients but not domestic).

Whereas, other developing countries have yet to implement robust financial market oversight and ensure that providers adhere to best practices with customers and give customers proper channels to seek 3rd party assistance, and may only offer the ability for companies to become incorporated and carry out permitted activities – yet with no real oversight.

Available Dispute Resolution options in different jurisdictions

 Country Complaints Resolution Body Annual Membership for FX Dealers Resolution Cost to Client Resolution Cost to Broker Max. Complaint Amount Average  Resolution Time
USA NFA Arbitration Program NFA Membership $125,000 plus other fees Filing fee $50-$1,550 + Hearing fee $125 to $5,100 Filing fee $50-$1,550 + Hearing fee $125 to $5,100  5m
Mediation by Approved Party  $300-$500 per hour  $300-$500 per hour  N/A
 New Zealand  FSCL  ~$700-$1,400  $0  ~$240 complaint opening fee + $700 to $4,000 resolution fee  $135,000  2m
 FDR  ~$1,200  $0  From $370 to ~$1,400  $135,000  N/A
 Australia  FOS  ~$300 and up based on the size of business. +ASIC Membership fees  $0  Up to ~$2,300 for external advice + up to ~$2,500 to cover applicant expenses  $114,000  2m
UK FOS FCA $0 $0 ~$210,000 2m
Cyprus FOS CySEC Membership fees from ~$4200 and up based on the business size but not more than ~$85,000  ~$23  $0  ~$56,000  6m

*All fees are presented in US Dollars, so please mind the local currencies rates.

**Please refer to official websites for most recent and accurate information as conditions may change over time. If you found an error, please let us know.

Organizational structure

Financial Commission can help to bridge the gap as an industry focused EDR, and as standard alternative and traditional channels can be costly and/or time-consuming.

For example, in one jurisdiction where the initial cost of annual membership could be very low, the hidden mandatory costs that brokers bear for every customer complaint can be significant, regardless of whether the case is favorable to the client or the broker.

Such scenarios, over time, can compound the problem while discouraging the broker from advertising to clients about the option available to file a complaint.

Supporting self-regulatory initiatives

There are highly regulated jurisdictions where brokerages strive to adhere to strict rules, yet clients can find it very difficult to go through the entire complaint process within traditional channels unless the complaint is for a significant monetary amount – motivating a client’s persistence (or their attorney’s) through the entire process. Even then, there is no assurance that the case will be fully investigated properly and result in the right outcome.Thus, many smaller complaints can fall to the wayside.

Financial Commission provides value to traders and brokers in such cases and helps potentially amend broken relationships and avoid subsequent negative reviews from clients whom would otherwise feel wronged.

Financial Commission has found through its research that even in highly regulated environments the available channels to resolve customer complaints can be costly and inefficient or fast yet ineffective. Ideally, channels should be effective, fast, and affordable, and are all aspects that Financial Commission organically achieves due to its organizational structure.

Legal options such as the domestic courts mentioned within broker-client account agreements should be a very last option, and not the goto place for clients when they are unable to resolve their complaints directly with their broker, meanwhile, these agreement are referenced by Financial Commission in cases where compliance with the agreement is in question by either or both sides.

Financial Commission supports the self-regulatory efforts of financial markets participants through its voluntary membership structure.This allows brands that are either unregulated or highly regulated to become members of the Financial Commission and show clients their level of commitment to integrity and in treating them fairly.

Dedicated to Education

Financial Commission has observed that customer complaints often stem from a misunderstanding about how a product works, and subsequent experience while trading, and then revert back to the broker with a sense of the broker being responsible for the experience. However, also observed is that when brokers are at fault the reasons aren’t always easily evident to their staff, unless detailed investigations are done, or advanced reporting and tracking is readily available.

Financial Commission is dedicated to broker education as much as it is to client education, as complaints often stem from misunderstandings, as is such in nearly all human dealings and consumer/company relationships education helps improve understandings. To learn more about Financial Commission and membership benefits, please visit us at FinancialCommission.org.