FinaCom Says Traders Sought to Recover $3.4M from Their Brokers in Q1

The Financial Commission received a total of 278 complaints in the first quarter, up 31 percent from a year earlier.

Today, a new report issued by the Financial Commission has revealed that retail traders’ complaints had increased by a third in the three months through March 2020. The independent regulator said earlier the volatility triggered by the COVID-19 pandemic encourage more activity, and thus more disputes that were examined in the last quarter.

The commission received a total of 278 complaints in the first quarter, up 31 percent from a year earlier. Out of this figure, more than 258 investigations into member brokers have been carried out and resolved by the FinaCom, an increase of 27 percent year-over-year.

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The self-regulator noted that financial complaints and non-trading complaints increased considerably by 74 percent and 42 percent respectively for in the first three months of 2020, as compared to 2019.

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Over the last three months, FinaCom’s enforcement action has resulted in a record number for total compensation awarded to traders, who claimed to recover nearly $3.5 million from their brokers. The amount paid in penalty or settlements by the companies is estimated to $203,715, which is eight times more than it was in the Jan-March quarter in 2019.

Tough regulatory work ahead

Despite experiencing a rise in submitted complaints, the organization’s Dispute Resolution Committee made progress across some of its key business drivers. Specifically, the average timeframe of resolving the dozens of submitted complaints improved to 5.2 days from 7 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.

The regulator further states that the average value of submitted complaints also rose to $15,968 in 1Q 2020 relative to $5,295 in 1Q 2019.

According to its latest annual report, the Financial Commission 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. Other highlights also show 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.

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