The Financial Commission (FinaCom PLC), an industry-specific dispute resolution service that caters to the financial services industry, has added a new voice risk disclosure requirement to protect investors from being misled.
In the drive to improve investor confidence in the Commission’s role, the enhanced disclosure requirement has revisited and updated the principles outlined in its Rule 6.2 of Membership Rules and Guidelines.
Pointing out that the self-regulator’s rules place responsibility on each member to notify traders about risks associated with advisory service, FinaCom has developed additional voluntary financial risk disclosure to ensure that such risks are reflected in the broker members’ statements.
What Lies Ahead for a British Fintech Industry Outside the EUGo to article >>
Since it considers disclosure of trading risks a crucial component of a functioning financial market, the operator of FinancialCommission.org requires broker members to provide clients with a verbal or oral disclosure that ensures they understand the risks posed by online trading.
In particular, the new rules require the commission’s members to obtain a written and voice acceptance from each client to acknowledge that they are aware of relevant risks of relying on or considering investment advice.
The statement further reads: “Today, brokers must obtain a voice recording from their customers acknowledging and accepting full risk of loss for any investments made in their trading account as a result of advice provided from the company or its agents via voice or digital methods. The update to the VRD is aimed to ensure that clients are aware of the services they are being provided and are ultimately responsible for trading or not trading based on the trading strategies shared by any consultants, independent advisors or 3rd parties. Ultimately, clients can choose not to receive such advisory services from their trading provider and can make their own determinations on investment objectives.”
Financial Commission is an external dispute resolution organization which is supported by the Dispute Resolution Committee (DRC), which in turn is comprised of recognized industry professionals. FinaCom is an independent international service that guarantees honest and timely resolution of any disputes with the aim of resolving trader-broker conflicts.