New figures from the Financial Commission show that more traders complained to the independent regulator in Q1 2019, as volatility triggered by the COVID-19 pandemic encourage more activity, and thus more disputes.
FinaCom today revealed that “trading-related” complaints jumped eight percent year-to-date, while “financial-related” complaints rose by a third since the beginning of 2020. The watchdog attributed the uptick in disputes involving its broker members to customer activity that has significantly increased during times of market volatility.
Despite experiencing a rise in submitted complaints, the organization’s Dispute Resolution Committee made progress across some of its key business drivers. Specifically, the number of resolved complaints increased eight percent year-over-year as compared to 1Q 2019.
The commission projects the total figure to grow by over 25 percent when it releases its final metrics by the end of March as it continues to receive dozens of complaints amid the COVID-19 pandemic.
Furthermore, the average timeframe of resolving the complaint improved to 5.9 days from 6.77 days in 2019 and 7.9 days in 2018. This metric measures the average length of time the dispute takes from the date the commission begins the investigation to the date of closure, whether it was resolved by agreement, or closed with no further action.
New CFDs Now Available for SuperForex ClientsGo to article >>
More traders chasing their money ever since
FinaCom said the decrease in average dispute resolution time reflects the speedy processing during a period of record numbers of processed complaints and the complexity of submitted cases.
According to its latest annual report, the self-regulator received a record of 1,012 complaints in fiscal 2019, even as the amount it recovered for broker member customers fell slightly from a year earlier.
Concerning outcomes from using their enforcement powers, the amount of total compensations awarded to broker member clients in 2019 moderated to $602,924 from $784,380 in 2018, and more than halved from $1,564,700 in 2017. This figure, however, could double in 2020 as the swings of cryptocurrencies that drove FinaCom to award more compensation in recent years look like nothing compared to the recent meltdown in global markets.
Many Forex brokers already warned their traders of volatile trading conditions in financial markets, flagging the risk of large gaps, widened spreads, higher margins, and trading halts. These difficult conditions could become increasingly common as investors fear the impact of the coronavirus outbreak and a war of price oil between the Russians and the Saudis.