Unauthorised forex trading and brokerage firms

We have seen a sharp rise in reports from consumers about unauthorised trading and brokerage firms.

These firms offer consumers the chance to trade in foreign exchange, contracts for difference, binary options and other commodities. They promise very high returns and often talk about guaranteed profits either through a managed account where the firm makes trades on the consumer’s behalf or by enabling the consumer to trade themselves using the firm’s trading platform.

Firms offering these types of services in the UK will generally need to be authorised by the FCA. Many of the firms reported to us are not authorised by the FCA but claim to be based in the UK and often provide a prestigious city of London address. In reality, they have no physical presence in the UK and are not based at the addresses they provide.

How unauthorised Forex (FX) trading and brokerage firms work

Most consumers have reported similar experiences to us. They will initially receive some returns from the firm to give the impression that their trading has been a success. They will then be encouraged to invest more money and at this stage or soon after, the returns will stop, their account will be suspended and they will be unable to make further contact with the firm.

If you want to trade in high risk investments such as foreign exchange and contracts for difference, make sure you only deal with FCA authorised firms.

Many scam firms reported to us will claim to be based in the UK and even claim to be FCA authorised so check the FCA register of authorised firms before dealing with any firm. If they are not authorised by us, they are likely to be a scam and you are at risk of losing all your money.

Beware of clone firms

Many bogus trading / brokerage firms will use the name, ‘firm registration number’ (FRN) and address of firms and individuals authorised by us to suggest they are genuine. This is what we call a ‘clone firm’.

The scammers then give their own phone number, address and website details to possible victims. We have also heard of fraudsters claiming that a firm's contact details on the Register are out of date, but this is unlikely as we update the Register each evening.

These scammers might claim to be from overseas firms that appear on the Register as these firms do not always have their full contact and website details listed.

These scammers may even copy the website of an authorised firm, making subtle changes such as to the phone number listed. We have even seen fake versions of our website and Register that include the fraudsters’ contact details rather than those of the genuine, authorised firm.

Protect yourself

To verify the identity of an authorised firm ask for their FRN and contact details, but always call them back on the switchboard number given on the Register. If there are no contact details on the Register or the firm claims they are out of date, contact our Consumer Helpline on 0800 111 6768.

You should access the Register from https://register.fca.org.uk/ or from our website rather than through links in emails or on the website of a firm offering you an investment. Also check the address of our website is correct and there are not subtle changes that mean it is a fake.

With fraudsters adapting their tactics you should make additional checks to confirm you are dealing with the financial services firm in question and have the correct contact details – especially if you have been cold-called. This might include checking the details on the firm’s website, or with directory enquiries or Companies House.

If you deal with an unauthorised firm you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.