As we commemorate Youth Month, the Office of the FAIS Ombud reaches out to warn our future investors regarding the complexities and pitfalls of forex trading. Young South Africans can be lured into participating in forex trading motivated by the possibility of making quick profits on these platforms.
Only transact with authorised and regulated forex providers and platforms. Don’t fall prey to individuals or websites sites promising risk-free trading and enormous profits. Based on complaints received by the Office, some of the common pitfalls to be aware of are:
Movements of Accounts/Withdrawal of Funds from Accounts:
People who claim to be forex trading agents approach consumers and offer to assist in opening trading accounts. They request access to the investor’s accounts in the form of shared login credentials and then withdraw funds from the accounts without the consent of the investors.
Forex Trading Bots Advertisements:
Trading bot advertisements promise significant investment returns, often claiming annual returns of more than 85% on investments. Consumers are urged to be very wary of these types of claims and to thoroughly research the company before investing.
Misleading information from Account Managers:
Be wary of account managers who require further investment deposits to recover losses. Throughout the trading period, the account manager will seek to reassure the client about their investment’s profitability and risk management. However, this approach suggests flawed account management that relies on continuous deposits and not a genuine investment strategy.
Persistent Pressure to Invest
Be wary of an account manager who persistently pressures you to deposit funds into trading accounts, disregarding your financial situation and risk tolerance. In some cases, account managers are aware of the client’s financial information and other investments yet still urge them to pull money from their bonds or other sources to invest in these accounts.
Fake social media profiles impersonating prominent people Consumers are being lured into investing by fake social media accounts claiming to be associated with prominent figures in the forex trading industry. Again, we urge consumers to do their research before investing.
In most of the instances mentioned, consumers are dealing with people or companies who are not authorised to render such a service. Consumers see an opportunity to make money and often do not take the time to question, do their own research, and understand how forex trading works. The total absence of any disclosures, contracts, or records of advice should also be an important warning sign. Consumers must only deal with forex providers registered by the Financial Services Conduct Authority.
Should you believe that you have been financially prejudiced because of the financial service rendered to you with respect to a regulated financial product, please lodge a written complaint directly with the service provider. If the complaint remains unresolved after six weeks, you can visit our Complaints Portal at www.faisombud.co.za and select ‘Lodge Complaint’. Alternatively, you may submit a complaint in writing to info@faisombud.co.za. You can also call our Client Care Centre at (012) 762 5000 or Sharecall at 086 066 3274 for assistance in submitting a complaint.
