Ways to settle Forex disputes
Problems with existing ways of resolving disputes
The Finance Commission conducted an analysis of existing dispute resolution methods available to both brokers registered in highly regulated jurisdictions, such as the US, and those registered in developing jurisdictions, such as New Zealand, and found that each had its own disadvantages and advantages, be it Australia, Singapore or Cyprus.
The study found that there is currently no one-size-fits-all solution or panacea to assist both traders and brokers alike, while being efficient and cost-effective when it comes to handling client complaints. However, this is an area where the Financial Commission can make an invaluable contribution as the Forex, CFD and Binary Options markets are the main markets that the Financial Commission was created to support.
Comparison of dispute resolution processes
Many jurisdictions require a licence to carry out financial activities, but in some cases even obtaining such a licence does not guarantee that financial activities can be carried out in their entirety. For example, only foreign clients, and not residents of a given State, may be permitted to provide services.
Many countries have yet to implement robust financial market surveillance mechanisms and quality control measures, including the provision of proven dispute resolution methods, such as independent mediators for disputes. However, at the moment there is a possibility for companies to enter a certain jurisdiction and join certain permitted activities without real supervision by supervising authorities.
The Finance Commission can help overcome this situation as a sectorial organization for external dispute resolution, as an alternative to existing, costly and time-consuming methods of resolution.
By comparison, in jurisdictions with low annual membership costs, the costs incurred by brokers for each complaint can be very high, regardless of the amount of the complaint, and in whose favour the dispute is resolved. As a result, brokers do not want to inform their clients about possible ways of filing complaints.
Support for self-regulatory initiatives
There are jurisdictions with a high level of regulation where brokers have to comply with very strict rules, but the process of dispute resolution remains complex and time-consuming for the client. Even if the complaint is of a large amount, which certainly motivates the client (or his lawyer), there is no guarantee that the case will be thoroughly investigated and an informed decision will be made on it. As a result, claims for small amounts simply fall out of this process.
In such cases, the Financial Commission can be very helpful to traders and brokers and can prevent potential termination of their business relationship, including avoiding negative feedback from clients who feel aggrieved by the lack of an effective and adequate dispute resolution method.
Based on its research, the Finance Commission found that even in highly regulated jurisdictions, the available means of resolving client complaints are very costly and inefficient. Ideally, these methods should be efficient, rapid and accessible, as is the case with the Finance Commission, which achieves these objectives through its organizational structure.
Legal avenues of resolution, such as recourse to national courts referred to under client agreements, should be the last option, and not the place where a client should go if it is not possible to resolve a dispute with his broker directly. At the same time, all such agreements are examined in detail by the Finance Commission where compliance with the terms of the contract is being questioned.
The Financial Commission supports participants in financial markets, whose structural organization implies the possibility of joining self-regulatory organizations. This allows companies registered in both tightly regulated and under-regulated jurisdictions to become members of the Financial Commission and show clients their commitment to business values.