“We must exclude a possibility for unfair participants to attract customers on the forex market”

Alexander Razin outlined the measures planned by FAS for the market of forex-dealers

Deputy Head of FAS Department for Control over Financial Market, Alexander Razin took part in a Round Table for “Protecting the Rights of Consumers – Users of Forex Services” on 24 August 2017.

Attendees included representatives of the Bank of Russia, the Office of the State Duma Committee on Financial Market, the Council under the President of the Russian Federation for Developing Civil Society and Human Rights, the Chamber of Industry and Commerce of the Russian Federation, as well as representatives of sectoral associations, unions and forex market participants.

Special attention was paid to countering unfair market practices.

Alexander Razin outlined the measures planned by FAS on the market of forex dealers, particularly, under the frame of the Action Plan (“Road Map”) for “Developing Competition on the Market of Financial Services”), approved by FAS Order in May 2017 and agreed upon with the Central Bank. The Plan provides for drafting proposals designed to exclude possibility to attract customers on the forex market without a relevant license, particularly, through training centres.

The speaker pointed out that for successful implementation of comprehensive measures, aimed at preventing adverse practices on the forex market, particularly, related to attracting Russian customers by offshore companies without a relevant license, and to advertising forex-services by companies, using licenses that do not authorize such operations, “assistance of the Bank of Russia is required in the part of explanations on classifying all operations for attracting funds on the forex market to exclusive competence of licensed forex-dealers”.

“Currently, some companies attract customers, calling themselves forex-brokers, forex-intermediaries, using other terms different form the statutory term – “foreign dealer”.  Their operations are identical to the functionalities of forex-dealers. In FAS opinion, a relevant explanation by the Bank of Russia will enable, in particular, to apply the law on advertising in order to suppress illegal advertising of such services by the companies that do not have the right for it”, stated Alexander Razin.

Regarding customer attraction to offshore companies through training centres, Alexander Razin explained that the issue is more complicated since formally such training centres operate on the basis of an education license and position their services exactly as training ones. In some incidents, unfair participants take advantage of customer trust and involve them through training in the services of illegal forex-companies, mostly registered outside the jurisdiction of the Russian Federation.

“FAS jointly with the Forex-Dealers Association plans to organize working meetings with the Ministry of Education in the near future, to discuss the situation with such training centres and come up with the common position regarding further actions”, clarified Alexander Razin.

The Round Table also discussed regulatory requirements to forex-dealers, the concept of a consumer right standard, and the measures to enhance competence of financial service consumers on the forex-market.

Since 2015, forex-dealers all classified by law as professional participants of the securities market and are supervised by the Bank of Russia. Therefore, in accord with the Federal Law “On Protection of Competition” forex-dealer is a financial organization.