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On January 25th, the Financial Commission (FinCom), an independent self-regulatory organization and external dispute resolution (EDR) body dedicated specifically to the Forex trading industry, published its 2022 Complaints Summary.
The most important takeaway from the report was the record number of complaints filed against FinCom’s members. In 2022, 3,026 complaints were filed – a 26% increase over 2021.
While this figure may be troubling, it’s also important to note that FinCom added 13 new brokers to its membership lists in 2022, many from the Asia region, where new complaints rose by 47%. New complaints also rose by 38% in Latin America and 30% in Europe.
FinCom also reported a record increase in resolved complaints. Of the 3026 complaints received in 2022, 2968 were resolved – with an average resolution time of 5.6 days; the fastest average resolution time in 10 years.
Another eye-opening figure from report is the $7.4M total compensation sought from FinCom’s members. This represents a 76% increase over 2021. Interestingly, the average compensation value decreased in 2022, down 34% to $4,348.
These figures point to an interesting picture where more traders are bringing complaints against their brokers, but the sums involved are smaller than in previous years.
While there can be no firm conclusions made from the data, it does suggest that many complaints in 2022 came from traders with smaller account balances or less serious claims.
The report states that the most common causes for complaints were account blocking (29%), funds withdrawal (19%), price check (14%), non-market quotes (7%) and stop-out orders (6%). Of all resolved complaints, 42% were resolved “in favour of the broker”, 16% resolved “in favour of the client”, and 42% were found to be outside the organization’s jurisdiction.
While some may be surprised by the broker win rate in these complaints, it is clear from the statistics that many traders do not read their broker’s terms of business and do not fully understand their legal rights.
FinCom concludes that “heading into 2023, [we expect] to see healthy global demand for trading and investing, particularly among younger traders, with fiscal and geopolitical risks impacting the prices of commodities, equities, and digital assets through the year. In this regard, the organization is prepared to handle a further growth in the number of new complaints from traders during the year.”
Overall, this report shows the increased trust both brokers and traders have in FinCom. A number of major brokers are now members of FinCom, with Pepperstone also becoming a member in 2022, and the dispute resolution service does seem to be functioning.
While FinCom can never replace strong regulation from a trusted national authority or the compensation schemes in place in the EU and UK, it is swiftly becoming a welcome extra layer of security for many traders around the world.