The Cyprus Consumer Protection Bureau has issued a statement outlining that it has taken an administrative action against IronFX. The news comes amid years of scrutiny over the practices of the Cypriot brokerage company.
According to a decision made by the authority, IronFX has an unfair contractual clause in its client agreement. The government body statutes that the document breaches terms in the Consumption Law.
The official announcement states that the decision has been issued by the Director of the Cyprus Consumer Protection Agency after an investigation has been carried out in connection with the existence of an unfair clause in the client agreement contract.
The Cypriot authority that is designated to protect consumers is outlining that the right of the company, in its sole discretion, to refuse, withhold or withdraw from the accounts of its customers the payment of a bonus constitutes a violation.
The decision made by the Cyprus Consumer Protection Bureau is not legally binding in Cyprus because the brokerage industry is supervised by CySEC. Sources with knowledge of the matter shared with Finance Magnates that the regulator sees the decision as untimely and considers the issue has already been addressed when the financial watchdog settled with the firm for €335,000.
Commenting to Finance Magnates on the matter, a spokesperson for IronFX outlined: “The Company believes that the content of the decision issued by the Consumer Protection Service (CPS) is factually and legally erroneous, inaccurate as well as defamatory in its entirety. The Company has obtained a plethora of legal opinions from top international law firms confirming the Company’s compliance with MIFID rules. The various opinions including a QC opinion obtained by a leading UK Counsel confirm that the Company has every legal right to take the actions stated in its applicable, at the time, promotional T&Cs whenever a client was found to have abused the Company’s promotional T&Cs.
Risk Management for Businesses in Today’s WorldGo to article >>
The Company has explained the above to the CPS on numerous occasions and had further invited them to visit our offices and review all Opinions on-site themselves. Such meeting had never taken place. The Company had additionally explained to the CPS that is authorized and regulated by the Cyprus Securities and Exchange Commission and its services are governed by the regulatory framework covering the provision of investment services and as such, the recipients of its services are not deemed to be “consumers” within the definition of the local law based on which the CPS has issued the said decision.”
The firm also mentions a court decision from Hungary, in a case where clients of the firm were denied claims made against the brokerage. The Hungarian High Court determined that clients of financial services are not “consumers”. The firm also outlined that it has multiple legal opinions that its terms and conditions are fair.
Yesterday, Finance Magnates reported that the parent company of the brokerage, IronFX Global, has changed its name to Notesco Financial Services after it received a €100 million investment from Saudi fund Gemini.
“The Company believes that the issuance of the said decision was done purposely in an attempt to defame the Company as a result of among others, its recent announcement of the investment by a prominent MENA family office. It is also the Company’s belief that the issuance of the said decision was done with the sole purpose to harm the Company and serve the interests of third parties just before the forthcoming Presidential elections in Cyprus,” the official statement from IronFX concludes.
The firm ceased to offer any promotions in line with CySEC requirements set in Circular C168 in January 2017.