Interactive Brokers to Refund $1.5 Million in Fees & Commissions in Australia

The Australian customers of the company will be reimbursed with the fees and commissions which they paid to the brokerage

rp_interactive-150x150.jpgThe Australian Securities and Investments Commission (ASIC) has issued an announcement outlining that Interactive Brokers (NASDAQ:IBKR) is preparing to refund more than 3,000 of its Australian customers with the fees and commissions which they paid to the broker for retail margin loans.

The company will refund about $1.5 million to its customers and  in addition pay $100,000 to the Financial Rights Legal Center which deals with matters of educating the Australian public about financial services and consumer rights.

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Interactive Brokers (NASDAQ:IBKR) has been engaged in a voluntary undertaking with ASIC since August 2013 when it agreed not to issue nor increase any new or existing margin loans. The company has also wound down its facilities and is currently not offering margin lending facilities to ‘natural person’ clients in Australia.

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ASIC Regulation of Margin Lending

asicThe regulation of margin lending began on January 1st, 2010, with the introduction of the Corporations Legislation Amendment Act, which required issuers of margin lending to be regulated by ASIC through an Australian Financial Service (AFS) license. In addition, under the Australian regulatory environment, every client’s creditworthiness has to match his risk profile.

ASIC Commissioner Greg Tanzer said in the announcement, “Margin loans come with unique risks and will not be suitable for all consumers. It is therefore important that they be provided by appropriately licensed or authorised companies. Providers must also comply with their responsible lending obligations when issuing margin loans.”

PricewaterhouseCoopers will be reporting on its verification of the refund process to ASIC and IB.

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