How to resolve a dispute with a broker using a specialised lawyer

Dispute with a forex broker

The strength of our economy is largely measured in terms of our combined investments. It's our money and we can invest it however we see fit. Unfortunately, a few unscrupulous brokers abuse our freedom of choice by coming up with investment schemes that have no chance of succeeding. These brokers promise returns that they cannot achieve and that they won't even attempt to achieve. They're nothing more than crooks, their only goal is to take your money.

"Each year, 1.3 billion are lost due to financial scams in the UK" - FCA (Financial Conduct Authority)

Fraudsters copy the marketing techniques used by legitimate investment companies. As such, the fact that someone is contacting you by phone, mail, email or even by recommendation should not be considered as an indication that the investment is or isn't suspicious. Many reputable companies also use the same methods to effectively identify people who may have an interest in their investment products or services.

A scam can therefore be set up and presented as a legitimate investment opportunity. However, no matter where the scam originated, if you fall for it, the important thing is to not lose hope.

 

What manipulative techniques do brokers use?

Dishonest brokers use various manipulative techniques:

  • They trick their clients with questionable advice
  • They attract traders with bonus offers and promises of winnings
  • They establish a relationship of trust with traders
  • They pressure investors into depositing money after they have just lost some

Also, here are some of examples of professional misconduct that brokers may be guilty of:

  • Inappropriate recommendations (given an investor's profile)
  • Unnecessary delays or obstacles when withdrawing one's invested capital
  • Misleading and ambiguous information
  • Aggressive and inappropriate investment advice
  • Problems with the execution of trading orders
  • Operational bugs on the trading platform

 

Arbitrage: traders' rights in a legal dispute with a forex broker

As you may know, the forex isn't just a platform for easy profits, it also carries substantial risks. Order execution conflicts are commonplace between the parties involved in a transaction (the broker and the trader). As a result, traders are often involved in forex arbitration claims and legal disputes.

In most jurisdictions, local regulatorory agencies require forex brokers to participate in independent dispute resolution systems in order to protect the rights of traders in situations where a forex arbitrage dispute cannot be amicably resolved between a client and his or her broker.

The most well-known forex dispute resolution systems are:

Independent forex dispute resolution systems are entities that act as intermediaries between brokers and their clients. These systems can either be organised by the State or by the traders themselves for the benefit of other traders.

Conflict resolution via independent arbitration is somewhat different from the legal procedures that would occur in the country where a broker is incorporated.

First of all, it's free. When a trader files a lawsuit, he or she has to pay filing fees, but filing a complaint with an independent dispute resolution entity doesn't bear any costs for a trader. In fact, the financial costs of dealing with a dispute are borne by the broker. Being part of an independent dispute resolution system is required to obtain a brokerage licence, and brokers pay an annual membership fee for this.

 

How does one go about filing a complaint against a forex broker?

In forex litigation, mediators examine all of the evidence that the parties provide, including account opening agreements and other regulatory documents. That's why we recommend that you carefully review these documents before you file a complaint.

Commercial laws stipulate that a complaint can only be accepted if all attempts to resolve the dispute via the broker's internal systems have failed. The mediators will verify what steps have already been taken by the parties to resolve the conflict.

You must also keep in mind that financial compensation, which may be offered by arbitration, is limited. Some independent dispute resolution systems have set a maximum amount that can be awarded to a trader if a claim is settled. However, other independent dispute resolution systems provide for a minimum level of compensation. This means that they will not investigate disputes that are below this minimal amount.

Step 1: Try to solve the problem by contacting the broker.

Get in touch with the broker and complain directly to him - conflicts are often caused by misunderstandings, and an amicable solution can often easily be obtained thanks to clear communication. Moreover, as we have mentioned, and depending on the jurisdiction, regulated brokers must have an established procedure for the handling of complaints, so in theory the process is streamlined.

Helpful Tip: It's best to communicate with your broker in written format - this way, both parties can track the problem and monitor what has been done and what hasn't.

Another helpful tip: Be patient, especially if your request is complex. It can take up to 7 weeks to get a response from the broker. If seven weeks have elapsed before you get a response to your complaint, go to the next step.

Step 2: Contact the financial mediation service.

If the broker did not process your request within a reasonable time (maximum of 7 weeks), or if you are not satisfied with the answer you received, you can contact the financial mediation agency.

However, the Ombudsman is only required to arbitrate issues that have been raised with the broker and generally traders do not know exactly what legal issues to raise with the broker. The mediator is therefore often led to reject a complaint although he might note that the broker has acted wrongly in other areas of the situation.

For these reasons, it may be a good idea to call on a specialised lawyer who will assist you before the Ombudsman.

However, a lawyer should only be considered for the resolution of disputes with EU-regulated brokers and for amounts over €15,000.

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