2018 saw binary options regulation fall under the remit of the Financial Conduct Authority for the first time. In less than three weeks, the regulator has shown the industry it is willing to play an active role in cleaning up the sector by publishing the FCA Unauthorised Firms list.
After a scathing letter to CFD brokers, the FCA have now turned to binary brands. The regulator has been particularly keen to expose operators who are unlicensed. This week, they have published a list of almost 100 brands, all of which, the FCA say, are operating illegally in the UK.
Here is the list: FCA Unauthorised List
We have also added a link to the list to our page on avoiding scams. While stopping short of labelling these firms “scams“, the FCA are warning consumers not to risk using these unauthorised firms.
What a contrast to the UK Gambling Commission, who seemed unwilling to monitor the sector in any meaningful way.
Too Late To Save Binaries?
Meaningful regulation may however, have come too late to save binary options. While the majority of scams seem to have moved into Cryptocurrency, other regulators are still playing catch up. CySec, for so long completely toothless, are now cracking down on binary trading harder than ever. Their latest threat is a complete ban on binaries.
A ban is not just heavy handed, but also potentially ineffective. The first problem is that operators who were willing to break the law before, are equally likely to break it afterwards. Bans will not deter them one bit. Taking unauthorised credit card payments has always been theft – but it did not stop the worst brands doing it. So why should a ban stop them? It will however, close the responsible brands.
Secondly, a ban is a lazy way for the regulator to address the issues. It allows the regulator to walk away – “We fixed the binary issue, we just banned them.” and wash their hands of it. If a stock broker was found to be marketing the sale of stocks and shares illegally, or withholding funds or some similar behaviour – they would be closed down and prosecuted. Share trading would go on however, it would not get banned.
So why are binaries treated differently?
A regulated industry makes it easier for authorities to identify and prosecute fraudulent firms. A ban is a knee jerk “fix” which gets regulators off the hook. They do not then need to do the leg work and actually go and regulate anyone.
No-one is claiming the binary sector does not require strong regulation – it absolutely does (We actually championed FCA regulation over 2 years ago). A ban however, is over the top and in our opinion, misguided. Hopefully the freedom to choose will remain.
One final point, there are no unauthorised firms in our broker comparison table!