Forex Trading is Possible in Ireland With the Help of CBI Forex Brokers
Forex trading has taken the world of investment by surprise. It has become so popular, that many countries are still playing catch-up with regards regulations. The Forex industry, as a whole, remains a largely unregulated sector of business, as there is no one single regulatory body overseeing the whole industry. Instead, there is a system of more local regulation currently in force, with individual countries providing their own level of consumer protection. This situation is quickly improving, as Forex trading is starting to be regulated on a larger scale, with legislation such as MiFID, and increased cooperation between individual regulatory agencies. Those of you considering this form of investment are probably wondering about Forex brokers in Ireland. So let’s see if we can explain.
Who is the Irish regulator responsible for financial services providers?
Prior to 2010, all Irish financial entities were regulated by the Irish Financial Services Regulatory Authority. However, in 2011, a new regulatory body was established known as the Central Bank of Ireland Commission. This Commission has the task of issuing licenses to CBI regulated brokers but also has a number of other very important roles. It acts as a watchdog for the following service providers and their activities:
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- Insurance providers including general and life insurance as well as any consumer related issues
- Credit unions
- Credit and mortgage providers and money lenders as well as overseeing customer charges and related consumer issues
- Credit institutions, investment intermediaries, stockbrokers, collective investment schemes, funds, financial exchanges, investor compensation and other issues which are related
This might seem like a lot of responsibility, but there is a good reason for such regulation.
The benefit of financial services regulation is to:
- Promote sound and solvent financial institutions providing consumers with an increased level of confidence in the safety of their funds
- Promoting fair and safe business practises in the financial service industry
- Setting minimum levels of competency and monitoring and enforcing consumer protection, conduct of business, and prudential requirements
Forex brokers in Ireland and other financial services providers have to comply with a number of statutory codes of conduct, developed and imposed by the Central Bank of Ireland. The aim of these codes is to provide a fair, transparent, and safe environment for investors, with the interest of clients being the ultimate concern. The Central Bank of Ireland is able to perform its duties by way of on-site checks and its own powers of enforcement.
When we did our research regarding the effectiveness of the CBI we were a little disappointed to learn it doesn’t have a very good reputation. But we were equally pleased to learn it is trying to reverse this opinion. For example, at the beginning of 2016, it made threats to revoke the licenses of 20 CBI regulated brokers. This action was taken following an investigation into the retail investment sector by the Central Bank of Ireland. It found there were more than 300 brokers not operating in compliance with mandatory reporting requirements. 171 of these brokers decided to fall in line with the requirements while 134 decided to voluntarily revoke their authorization. So, while the Central Bank may be responsible for supervising more than 2,600 retail intermediaries in Ireland, it seems to be taking its responsibilities much more seriously.
CBI regulated Forex brokers and the Consumer Protection Code
The Central Bank of Ireland has developed a Consumer Protection Code to protect consumers using financial products and services. All CBI Forex brokers and other regulated entities are regularly monitored to ensure the Code is followed. Any financial services firms are obliged to follow the code when providing financial services and products to the general public, when handing out financial advice and information, advertising financial services and products and with reference to any customer complaints.
The Consumer Protection Code applies to:
- Building societies and banks
- Insurance companies
- Insurance, mortgage and investment intermediaries – agents and brokers
- Stockbrokers and investment firms offering insurance policies, tracker bonds, long-term deposits, and Personal Retirement Savings Accounts
The Code can also apply to companies with a head office in another EU country that are offering their services to Irish consumers. But this type of company has to be authorized by the recognized regulator of that country.
It is a very simple process to check whether a Forex broker is regulated by the CBI, as there is an easily accessible register at www.registers.financialregulator.ie.
CBI Forex brokers and the Financial Services Ombudsman
For Irish Forex traders, there is an independent body that deals with unresolved complaints from consumers in relation to their dealing with financial services providers, including Forex brokers in Ireland. Private individuals, businesses, charities, clubs, trusts, or partnerships are entitled to use this avenue for complaints if they have a turnover of less than €3 million per year.
However, before a complaint is raised with the Financial Services Ombudsman every effort must be made to try and reach a resolution. Which means you first have to use the provider’s own complaint process.
Should you be unsuccessful in resolving your complaint the Ombudsman is an impartial arbiter you can approach for further assistance with the matter. As of February 2016, the Ombudsman has changed the way it deals with complaints and now uses a more direct approach in the form of interaction with both parties. A more informal approach is used which includes mediation or conciliation, either by telephone or meetings. It is hoped that a more direct approach will result in far fewer complaints having to be independently adjudicated or handled in a more legal fashion.
If it is not possible to resolve the complaint through early intervention it is passed on to The Adjudication Service. The Adjudication Service will assess the evidence and issue a Preliminary Finding to both parties. If no further submission are made by either party the Finding will become legally binding.
While the Central Bank of Ireland has so far cast a shadow of doubt over its regulation of the financial services industry things are starting to look much better. We are always going to recommend you choose a regulated broker over one that is unregulated, and things are now starting to look much better for Forex traders in Ireland. You should, however, remember there are a number of different regulatory bodies and for the time being it might be better to look for CBI regulated brokers which are also regulated by another more reputable agency.