XM and FIBO Agree to Suspend Services in Australia
The Australian watchdog has requested that brokers stop onboarding clients from the country until their local licensed subsidiary is ready.
The Australian Securities and Investments Commission (ASIC) reported today that BVI’s FIBO Group Limited (FIBO) and Cyprus’ Trading Point of Financial Instruments Limited (XM.com) have each agreed to cease providing unlicensed financial services to Australians.
Both international brokerage groups had established local legal entities that received Australian Financial Services (AFS) licences in 2013. However, ASIC explains that it was informed by the Australian AFS entities of each group that they had not commenced providing financial services and therefore were not required to meet a number of obligations, including complying with the $1 million minimum net tangible asset requirements.
AFS licensees advertising and offering their services on websites before being able to commence providing those services could be found to have engaged in misleading and deceptive conduct. XM and FIBO have agreed to remove references to the Australian entities and Australian regulation from their group websites. The watchdog says these types of references should not be used until the respective Australian entities are ready to start providing financial services under their AFS licenses.
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ASIC Commissioner Cathie Armour commented, “ASIC has received a number of complaints from investors who have mistakenly believed they are being provided services by an Australian financial services licensee when in reality the agreements are with a different company.
Often these investors have signed up via a website run by a group of entities that heavily promotes one company within the group as having an AFS licence and being regulated in Australia. What makes it even more disappointing in these cases is the Australian entities’ services were being advertised when they were not even in a position to commence their businesses and with many of the usual regulatory protections not being in place.”
“Investors need to be diligent when entering into any contracts that relate to the provision of financial services. They need to make sure they know who they are dealing with and be aware of the country or regulatory regime in which the entity operates,” she concluded.
Too much regulation can hurt innovation in the financial technology sector.
Of course XM and other companies do this intentionally (list more regulation than they actually have or use). Why would a legit company need to do this?
There are plenty of fx brokers that have little or no regulation doing good business in general. Going overboard for the sake of vanity only attracts unnecessary attention.
Correct. It’s one thing to be offshore and just simply state the fact. It’s another thing to intentionally represent a jurisdiction you aren’t really apart of or are using. You cannot accidentially do something like this. FxPrimus did something very similar.
How is this over regulation? They were saying they are regulated in Australia, investors obviously belived that but they weren’t. If you don’t want to be regulated don’t advertise the regulation. Seriously these brokers need to wake up and smell the reality – backyard, dodgy advertising and avoiding regulation is over. Put up or shut down. If they don’t regulators will start banning the products entirely and everyone loses.