The Australian Securities and Investments Commission (ASIC) reported that the firm operating the local XForex brand, O.C.M. Online Capital Markets Pty Ltd (OCM), was hit with $30,600 in penalties after the ASIC issued three infringement notices for false or misleading online advertising.
The advertisements and emails in question promoted OCM’s FX and CFDS offering by making a number of claims about the advantages of using its financial service including “$2533 in Just 7 Days!” and “Learn how you can increase your monthly income”.
The watchdog says it believed that the advertisements and emails were misleading because: they gave the impression that OCM’s service could be relied upon to provide substantial profits quickly and to consistently increase one’s monthly income; they did not adequately convey that trading in margin FX derivatives and CFDs is high risk, provides volatile returns and does not guarantee consistent profits; and while they referred to risks and contained disclaimers, these messages were in fine print and were ineffective to correct the dominant message created by the headline claims.
2020 Global Market Outlook: How the “Known Unknowns” Can Affect CurrenciesGo to article >>
ASIC Commissioner Greg Tanzer said: ”Margin foreign exchange and derivative trading is high risk and gives volatile returns. Consumers should not be misled by false claims about the level or consistency of returns achievable from such trading.’
The payment of the infringement notices penalties is not an admission of a contravention of the ASIC Act consumer protection provisions by OCM. The watchdog can simply issue an infringement notice where it has reasonable grounds to believe a firm has contravened certain consumer protection laws. Its regulatory powers are set to further increase in 2016, in a manner that will affect the margin FX and OTC derivative industry quite substantially.