Following ASIC concerns, British Virgin Island company FIBO Group Limited (FIBO) and a Cyprus company, Trading Point of Financial Instruments Limited (also known by the trading name XM.com) (Trading Point), have each agreed to cease providing unlicensed financial services to Australians.

Both entities have Australian clients but neither entity is appropriately licensed to provide financial services in Australia.

The entities were advertising their services on their respective group websites which contained information about an Australian group entity which has a similar name that had an Australian financial services (AFS) licence, namely:

• Trading Point of Financial Instruments Pty Ltd who obtained a licence in December 2013; and
• FIBO (Australia) Pty Ltd who obtained a licence in September 2013.

 ASIC 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.

ASIC Commissioner Cathie Armour said, ‘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.’

Consumers can check if a company or individual is appropriately licensed by searching ASIC’s Professional registers.

AFS licensees advertising and offering their services on websites before they are able to commence providing those services could be found to have engaged in misleading and deceptive conduct. Trading Point and FIBO have agreed to remove references to the Australian entities and Australian regulation from their group websites. These types of references should not be used until the respective Australian entities are ready to start providing financial services under their AFS licenses.

Background

Australian clients who receive financial services from an entity which is not appropriately licensed may have the right to rescind their agreement with the entity and may be entitled to recover brokerage, commissions and other fees paid to that entity.

This work continues ASIC’s focus on the retail OTC derivative sector, including margin FX, CFDs and binary options.

Recent outcomes include:

• suspending the AFS licence of Australian Capital Advisory Services Pty Ltd on the grounds it had ceased providing financial services after a change of control (refer: 15-217MR)
• following an investigation, Advanced Markets agreeing to change potential misleading statements on its website (refer: 15-085MR)
• following an investigation, suspending the AFS licence of FX provider AGM Markets Pty Ltd (AGM) (refer: 15-075MR)
• warning investors not to deal with Grandegoldens (refer: 15-066MR). It is not licensed to trade in margin FX in Australia.
• cancelling Enfinium’s AFS licence because, among other things, concerns around inadequate risk management systems (refer: 15-026MR)
• following a surveillance, Calibre Investment changed the way it offers FX services to retail clients (refer: 14-327MR)
• restraining Monarch FX and its former director and general manager, Quinten Hunter, from carrying on a financial services business (refer: 14-342MR)
• shutting down Vault Market and removing its sole director, Mr MD Anamul Amin, from the financial services industry (refer: 14-309MR)
• warning investors not to deal with YoutradeFX (refer: 14-306MR). It is not licensed to trade in margin FX in Australia
• Pepperstone agreeing to stop providing financial services in Japan following inquiries by ASIC that revealed they were not licensed by the Japanese Financial Services Agency (refer: 14-267MR)
• cancelling the AFS licence of online FX broker Global Derivative Services after an investigation found it failed to comply with a number of its licence obligations (refer: 14-226MR)