Read our Guide to FSB Forex Brokers and Learn About Forex Trading in South Africa
Forex trading in South Africa is still very much in its infancy. However, judging by the speed at which other countries have embraced the world of Forex trading, those of you living there shouldn’t be worried. The South African financial sector is one of the most liberalized in the African continent and holds great potential for Forex traders. For those of you starting out on your Forex trading journey, finding a regulated Forex broker in South Africa is an important first step.
Who regulates Forex brokers in South Africa?
In South Africa, it is the Financial Services Board of South Africa. The responsibilities of the FSB include overseeing and regulating all financial intermediaries in the nation. The FSB has some very substantial powers and it able to impose unlimited fines and penalties on any FSB regulated brokers found to be breaking the rules. It also operates a customer complaints service which you can use to alert the authority to potentially illegal or unethical activities of a financial service company. The Financial Services Board is an independent body and was created following recommendations featured in the Van der Horst Committee. The Committee advised there was a need for an independent supervisory and regulatory body. Over the years the roles of the FSB have been increased as the result of further acts. The FSB is also a member of the IOSCO, the International Organization of Securities Commissions, as well as participating in the activities of a number of African regulatory bodies. Of particular importance are those in the Southern African Development Community region.
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How you are protected by choosing an FSB regulated Forex broker
Things in South Africa have become much more stable in recent years and that has included the South African Rand. However, the government has not been as quick to impose various controls. In fact, it has been very conservative in relation to exchange controls to limit the consumer’s ability to invest funds offshore. Nevertheless, there is a developed infrastructure in place and a more than adequate oversight. We would, however, still recommend a significant amount of due diligence is still required. There is always the possibility of fraudsters taking all your money. Security and safety should feature high on your list of priorities, and it’s vital you do your own research. You should always check the details of any regulated broker. Not just Forex brokers located in South Africa. All the regulatory bodies give members of the public access to lists of approved brokers, and it doesn’t take a computer genius to find the necessary information. You’ll be able to check whether there is a local office, the status of the license, and whether there have been any complaints.
What you can do if you have a complaint about an FSB regulated broker
In 2002, the Financial Advisory and Intermediary Service established the Office of the Ombud for Financial Services Providers. Its role is to resolve disputes between financial service providers and clients. It acts in an informal, economical, expeditious and procedurally fair way. There are, however, a couple of restrictions. The violation must have occurred on or after September 30th 2004 and not exceed R800,000. The services of the Ombudsman are free and easily accessible for all consumers. It is an independent organization promising impartial assistance, performing without fear, favor or prejudice.
The FAIS Ombud is able to deal with the following types of complaint:
- When a financial service provider has contravened or failed to comply with the requirements of the FAIS Act and the complainant has suffered or is likely to suffer financial damage or prejudice
- When a financial service provider has negligently or wilfully offered a financial service which has caused damage or prejudice to the complainant or is likely to result in the same
- When a complainant has been treated unfairly
Before making an official complaint it will be your responsibility to try and resolve the problem with the financial service provider, who has six weeks to resolve the matter. If you are unhappy with the outcome you will be able to make an official complaint, providing you raise it within six months. The FAIS Ombud is obliged to investigate the allegation, following and implementing any procedures it deems necessary. Any party involved in the complaint has the right to legal representation. The first step will be to try and reach a satisfactory conclusion via mediation or by recommending a resolution. If it is not possible to settle the matter with the help of both parties the FAIS Ombud will make the final decision. It can decide to either dismiss the complaint or uphold it and award compensation. The Ombuds decision is final and has the same effect as a civil judgment made by a court.
Why it’s important to choose a regulated Forex broker in South Africa
Regulation is possibly one of the most important factors to consider when choosing a South African Forex broker. Only by choosing a properly regulated broker can you ensure it has adequate capital to cover trading losses, your funds are held in secure and segregated accounts, and that it operates a fair trading environment providing the best possible market prices. It is a simple process to check a broker’s regulatory status and whether previous clients have had problems. Forex trading is a risky enough investment without adding to the risks involved by choosing an unregulated Forex broker. An FSB regulated broker will give you peace of mind, and allow you to concentrate on the more important choices of which trades to make. Most countries have their own regulatory body, but standards do vary. You will find that some brokers are registered and licensed in more than one country. Most will list which regulators they are licensed with on their website along with a registration number. Make sure you verify this information as there have been a number of brokers declaring false or misleading information.