FX dealers to operate under a basic consumer protection standard

Photo: 279photo Studio / shutterstock

FX dealers will be obliged to disclose to the fullest extent possible information about their operations and risks related to their services. These and other requirements are listed in the basic standard for financial consumer protection as regards FX dealers, which was elaborated by the Association of Forex Dealers and approved by the Bank of Russia.

The document specifically sets the minimum required information to be provided to financial consumers. FX dealers will be obliged to make the following relevant information publicly available online, in their offices, and via any other means: their full and abbreviated name, membership in a self-regulatory organisation (SRO), existence of representatives (agents), and commission fees and the procedure for paying out compensation in case of bankruptcy. In addition, FX dealers will be obliged to inform consumers about ways to protect their rights, complaint handling and dispute resolution procedures.

The standard places particular emphasis on the procedure for informing consumers about risks related to framework and other agreements, including their inherent financial losses, as well as the cost of obligation performance. The standard requires that such information be communicated to consumers before the conclusion of the framework agreement and included in the statement of risks to be signed by consumers.  Besides, the sections of FX dealers' websites instructing how to open demo accounts shall make it absolutely clear that similar operations in real trading do not guarantee profits. All consumer information shall be written in clear language, explain terms used, and be understandable to customers without a special financial market background.

The basic standard also focuses on countering unfair practices. For example, FX dealers shall refrain from the unreasonable widening of spreads not caused by market situation changes; their actions shall not mislead customers as to the financial services provided by FX dealers; and they shall also not help consumers to enter into agreements with foreign financial institutions.

In addition, the basic standard establishes requirements for handling complaints from financial consumers. They oblige FX dealers to review complaints within 15 calendar days from the moment of their receipt. This period may be extended to 30 calendar days if the information received requires further study.

The basic standard will be mandatory for all FX dealers irrespective of their membership in SROs and for all their representatives (agents). This being the case, FX dealers shall be held liable for all violations of the basic standards’ requirements by agents.

Basic standard requirements linked to the provision of information to financial consumers will be in effect starting 1 April 2019. Basic standard requirements related to the representatives (agents) of FX dealers and to minimum servicing standards for financial consumers, as well as requirements for FX dealers’ employees will be in effect starting 1 December 2019.

10 January 2019

× Закрыть