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FAIS Ombud: Forex Investment Complaints

11 December 2023 The Office of the FAIS Ombud

Forex trading and other forms of online day trading are generally regarded as high-risk investments that one must only undertake after serious consideration is given to the serious risks involved. Consumers must ask themselves whether they have the expertise required and are prepared to accept the risk of losing all the funds invested.

In a recent case dealt with by the Office, the complainant received a call from the representative of an online trading platform inviting him to subscribe to an online trading platform. The complainant believed that he could make substantial profits from forex trading. He invested approximately R725,000.00 over several months. At the end of the period, he had lost most of his capital, having only received one withdrawal of R3,959.35. When the complainant requested a second withdrawal, it was automatically rejected by the platform, as his balance was insufficient to process the amount due to the open positions of the complainant at that time. His family lodged a complaint with the Office asking for all his capital to be refunded.

The Financial Services Provider (FSP) responded to the complaint and provided all the signed documents. Based on the evidence provided, the losses were purely due to the complainant’s online trading transactions. The complainant subscribed to the site directly and there was no evidence of any financial advice involved.

Furthermore, in terms of Rule 4 (f) of the Rules on Proceedings of the Office of the Ombud for Financial Services Providers, this Office cannot investigate a complaint that relates to the investment performance of a financial product, unless such performance was guaranteed expressly or implicitly.

The Office was unable to assist the complainant.

Consumers are advised to be wary of representatives who contact them in respect of such investments and encourage them to complete an online application without conducting a needs analysis and completing a Record of Advice, which details all the material disclosures made in respect of the risks involved.

Besides the serious risk involved, you need to make sure that you are dealing with a regulated forex broker who has a license issued by the Financial Services Conduct Authority (‘FSCA’). This Office has seen several complaints where complainants are lured by the promise of extravagant returns from individuals and entities that promote themselves solely on social media platforms but are not licensed to provide financial services by the FSCA. The Office is generally unable to assist if it is not a licensed and regulated entity.

Be very wary of anyone who promises you a forex or day trading investment with astronomical investment returns and an undertaking of zero risk of losing your capital. If it’s too good to be true, it normally is.

Should you believe that you have been financially prejudiced because of the financial service rendered to you in respect of a regulated financial product, then you can visit our Complaints Portal at www.faisombud.co.za and select ‘Lodge Complaint’. Alternatively, you may submit a complaint in writing to info@faisombud.co.za. You can also call our Client Care Centre at (012) 762 5000 or Sharecall at 086 066 3274 for assistance in submitting a complaint.

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