Want to Know More About Forex Trading in Luxembourg? Read our Guide to CSSF Forex Brokers
Luxembourg, officially known as the Grand Duchy of Luxembourg, is a country with no coastal borders in Western Europe. It has gained a reputation among mega-rich businessmen and large corporations for being a tax haven. Many foreign companies are drawn to Luxembourg, from all over the world, in order to seek refuge from large corporation taxation. It’s political and economic stability and attractive tax incentives mean that hundreds of corporations, American in particular, store huge chunks of their business in Luxembourg in order to cut hefty amounts from their tax bill. Such favorable conditions also mean there has been a rash of Forex brokers in Luxembourg looking to help with your Forex trading investment. When you’re looking for a Forex broker, wherever you may be located, your most important consideration should be regulation. Most countries that allow Forex trading will have a regulatory body in charge of overseeing the industry.
Who is responsible for regulating Forex brokers in Luxembourg?
The CSSF, otherwise known as the Commission de Surveillance du Secteur Financier, is responsible for all financial regulation in Luxembourg, including CSSF regulated brokers. It is responsible for supervising the following:
- Experts in the financial sector
- Credit institutions
- Regulated securities markets and their operators
- Investment companies
- Payment institutions
- Multilateral trading facilities
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The CSSF was established in 1998 when it took over from the former Commissariat aux Bourses and the Institut Monétaire Luxembourgeois. It has a number of very important functions:
Supervising CSSF Forex brokers and other entities operating in the financial market
Its aim is to promote prudent and considerate business policies according to regulatory requirements. It aims to protect the financial stability of regulated entities and the whole of the financial sector. It also monitors internal control systems and the quality of organizations. All financial activities in Luxembourg are monitored by the CSSF and it also ensures all laws and ordinances are enforced and respected. It is able to obtain all necessary information in order to perform its duties.
Overseeing public audits
It performs this duty by granting professional qualifications for the approval and registration of audit firms and statutory auditors. It is also responsible for implementing auditing standards and professional ethics standards and internal quality control of audit firms.
Any investor protection queries are the direct responsibility of the CSSF. It is part of the FIN-NET program (see explanation below) and is thereby the sole recourse for any investors with a complaint or those seeking compensation. Complaints are dealt with a little bit differently than many other countries in that there is no separate or independent ombudsman. There are some voices raising a number of questions concerning the ability of the CSSF to enforce customer complaints. The response, so far, has been considered unsatisfactory and the concerned voices are starting to shout louder regarding the capability of the CSSF to be effective.
What is FIN-NET?
FIN-NET is responsible for handling disputes between consumers and financial providers. It is a financial dispute resolution network of EEA out-of-court complaint schemes. It was launched by the European Commission in 2001. If a consumer has a dispute with a provider from another EEA country, members of FIN-NET will put the consumer in touch with the appropriate out-of-court complaint scheme along with providing all the relevant information regarding the scheme. The aim of FIN-NET is to give consumers the opportunity to make cross-border complaints in the language of their financial contract, or at the very least in a language in which they communicate with their provider.
The CSSF and customer complaints
The CSSF is recognized as being a competent authority to receive complaints from clients of institutions such as investment firms, banks and other professionals of the financial sector. It is able to act as an intermediary in order to reach an amicable resolution to the complaints. It does not, however, make binding decisions. It does not act as a judge or arbitrator or as an ombudsman defending a citizen’s rights against public authorities. The CSSF is not permitted to intervene when a court or another out-of-court settlement body is involved in the complaint. And it is not allowed to hear the complaint in relation to commercial and pricing practices of professionals such as charges and commissions. unless, of course, the professional has not informed the consumer correctly. The first step with your complaint will be to raise the matter with the professional or company and try and reach a solution. Your complaint should be addressed, in writing, to a member of the management board assigned to deal with complaints. You should allow a month for the company to reply and if there is no communication or a resolution is not forthcoming you will be able to contact the CSSF so it is able to deal with the complaint.
It is possible to check whether a Forex broker is CSSF authorized
We’ve already advised you to check a Forex broker is CSSF authorized, but how can you do that? The CSSF website has a list of authorized institutions you can use to check on CSSF regulated brokers. You will need the exact name of the institution, its full address, phone number, authorization (if there is any), and the names of the contact persons. You will be able to verify all this information in the authorized CSSF list. If you can’t find the institution in the list it is possible to contact the CSSF and ask for further clarification. It is also possible to see the names of financial providers who have been issued warnings by the CSSF, other authorities or those issued by European supervisory authorities. There could be a number of reasons why a provider is issued with a warning. For example, when a provider has been found to be giving false information regarding regulation. It is common for scam Forex brokers to profess to be officially regulated. Which is good enough reason to always check the details with the relevant regulatory body.