Is the Financial Commission Assisting the Brokers?
Regulatory oversight is absolutely pivotal in all sectors, including the Forex market. To facilitate this, every nation’s financial watchdog oversees the Forex market to guarantee that it plays by the rules. However, in some cases, an external dispute resolution service can also be used instead if the country’s regulatory body is unable to intervene. However, one must be extremely careful when using an outside dispute resolution service as some of them such as the Financial Commission often take the side of the brokers.
Financial Commission – Who are they?
The Financial Commission (FinaCom) was created about in 2013 as an independent regulator of the FX market. Today, FinaCom has approximately 30 Forex brokers registered with them, some of them committing major scams in the industry.
Financial Commission = Conflict of Interest
The Financial Commission depends on the Dispute Resolution Committee to deliver a verdict. This is a group of industry leaders who listen to disputes between brokers and their clients. That might be an advantage, but it also presents a clear conflict of interest. The Financial Commission members may be less inclined to rule against a broker, who is their client since they are the ones who pay the company. Therefore, inasmuch as the board members may know exactly what is going on, they may be less inclined to go against their peers in the industry and also their clients.
Furthermore, FinaCom does not have any legal authority to persecute brokers who go against the law as much as a financial regulator created through an act of parliament. That means they just depend on a mutual agreement to solve the disputes rather than the actual law. Consider a case where a Forex broker has numerous complaints against him; if they were prosecuted by a financial regulator, the broker would be liable for all damages. However, according to FinaCom’s Compensation Fund, only the fund balance is distributed equally among the complainants.
There is also a maximum compensation per client – $20,000 for Category A members and $5,000 for Category B members. Even if the client is owed more, the Financial Commission cannot exceed these amounts in compensation. In the case of a broker going bankrupt, for example, FinaCom would not have any authority to demand compensation either. This could happen to any Forex broker as it happened to several in January 2015, including FXCM, which was one of the largest Forex brokerages. That is because FinaCom does not have the legal authority to pursue client compensation in such events.
Victim of a Financial Commission Scam?
If the broker that you are interested in has a stamp of approval from the Financial Commission we believe that you should stay far away. If you were the victim of a Forex scam by any of the brokers associated with the Financial Commission make a complaint here and we will do our best to assist you in any way that we can.
