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 regard to regulations. The Forex industry as a whole remains a largely unregulated business sector, as there is no single regulatory body overseeing the whole industry. Instead, there is a system of more localised regulation currently in force, with individual countries providing their own level of consumer protection. This situation is rapidly 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 licences 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:
- Insurance providers, including general and life insurance as well as any consumer-related issues
- Credit unions
- Credit and mortgage providers and moneylenders, 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 related issues.
This might seem like a lot of responsibility, but there is a good reason for such regulation.
The benefits of financial services regulation are as follows:
- Promotion of sound and solvent financial institutions, thus providing consumers with an increased level of confidence in the safety of their funds
- Promotion of fair and safe business practices in the financial service industry
- Setting of minimum levels of competency and monitoring, and enforcement of consumer protection, conduct of business, and prudential requirements.
Forex brokers and other financial services providers in Ireland 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 that it doesn’t have a very good reputation. But we were equally pleased to learn that it is striving to reverse this opinion. For example, at the beginning of 2016, it made threats to revoke the licences 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 authorisation. So, while the Central Bank is 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 that the Code is followed. Any financial services firms are obliged to follow the code when providing financial services and products to the general public, handing out financial advice and information, advertising financial services and products, and dealing with any customer complaints.
The Consumer Protection Code applies to the following:
- 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; although this type of company has to be authorised by the recognised 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 had a shadow of doubt cast over its regulation of the financial services industry, things are starting to look much better. We are always going to recommend that 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 that there are a number of different regulatory bodies; and for the time being it might be better to look for CBI-regulated brokers that are also regulated by another more reputable agency.