New research suggest foreign exchange quotes complexity means that customers may end up with a poor deal

According to a new research, the scale of payments and transfers to foreign countries from the UK is very large. An estimated $26.8bn was transferred in 2017 alone as remittances (transfers by non-UK nationals to their home country).
Approximately £4bn was estimated to be ‘lost’ in hidden charges paid by small and medium sized enterprises in 2015. The new regulations are designed to increase the transparency of costs, but they do not impose changes in underlying market practices, such as in costs structures or how long an exchange rate offer remains available to the customer.
A particular issue in the retail FX market is the complexity and amount of information that a consumer needs to understand when deciding whether or not to transact with a particular firm. For example, firms can operate different transaction cost structures, use different exchange rates and can deduct costs from the monetary amount to be converted or from the amount of the new currency to be received. In general, attempts to improve consumers’ abilities to compare and contrast different providers in the financial services sector, especially where information is complex and could be presented in diverse ways, often involves standardisation or defining the minimum amount of information that needs to be presented at the point of sale.
Previous research has shown that providing more information about financial products doesn’t necessarily help consumers make better decisions, so it is vital to test the efficacy of such interventions.
According to the research, on average, people are more likely to shop around where no registration is required and on average, people are more likely to choose the highest received amount where the market exchange rate is the same across all offers (stable). The timestamp and statement have no significant effect.
The research results suggest that people make better choices when they can compare offers across providers that are fixed during the time they are searching. However, in line with previous research, adding further information in the form of a timestamp and disclosure about exchange rates changing did not improve participants’ choices.

According to our understanding:
God is in details. If there is too much information, you should not be intimidated, in some cases it can also be fun, and you may enjoy and benefit from the process. It may be just like assembling a puzzle.
Don’t be afraid to ask, answers can assist you, we are here to assist you, it is your call whether or not to use the information provided, and it is better to keep the information available out there. Confusing or not, people may need more time to adapt to the extra information provided.

BigTechs concerns privacy, concentration risk and other

BigTech firms are large technology companies with extensive established customer networks. Some BigTech firms use their platforms to facilitate provision of financial services.

The below as been quoted from Steven Maijoor (Chair of the European Securities and Markets Authority (ESMA)) speech:

BigTechs have the potential to win market share in financial services because they enjoy
competitive advantages such as economies of scale, vast customer networks, access to cheap funding and proprietary data that powers personalised services.

BigTech firms may use data to offer tailored services. This is a familiar idea from other lines of business. For instance, you may receive online advertising for a holiday destination based on your searches for local hotels, your social media posts or recent holiday-related online purchases.

A risk, however, is that even if competition in certain financial services increases at first, it may later suffer as BigTechs grow market share. Switching provider may be less convenient if financial services are integrated with other lines of business. In other words, BigTechs may, after successful entry and growth, achieve a ‘gatekeeping’ position. And they may use personal data to extract more surplus from consumers through segmented pricing.

Privacy and data rights are a major concern, especially in light of the apparently illicit use of personal data by some firms in recent years. A single firm may be able to learn and infer a huge amount about people’s lives and personal circumstances. Integrating financial services into online platforms increases even further the sensitivity of such information.

Although financial inclusion may be a benefit in some cases, there is a risk of exclusion in others. For example, reduced information asymmetry between provider and client for products such as insurance or credit may reduce prices for some consumers, but exclude others altogether. And people less inclined to use digital technology may lose out. Finally, a business model operating across economic sectors may raise concentration risk. An operational incident that originates in one platform service offered by a BigTech firm could have a large impact on other lines of business, including financial services.

Is it really limited liability company or “phoenixing”?

What phoenixing is?

Phoenixing is a common term used to describe the practice of closing a firm and that firm re-appearing under a new guise to avoid liabilities arising from the old firm. Each time this happens, the insolvent company’s assets, but not its debts, are transferred to a new, similar ‘phoenix’ company.

The insolvent company then ceases to trade and might enter into formal insolvency proceedings (liquidation, administration or administrative receivership) or be dissolved.

What the FCA is doing to prevent financial adviser phoenixing?

It has a broad programme of work under way to tackle the harm caused to consumers when regulated financial advice firms and individuals seek to avoid liabilities to consumers that have arisen because of the poor advice they have given. As part of thier ongoing supervision of firms and of individuals controlling firms, they actively look out for and act on, situations where a FCA regulated firm or individual is seeking to avoid their liabilities arising from awards made by the Financial Ombudsman Service or are deliberately seeking to avoid paying in the future because of their poor advice or practices.

Where the FCA finds individuals who deliberately avoided their responsibilities and not complied with previous awards made against their firms, it will question the fitness and propriety of these individuals and take necessary steps against them so that they don’t cause further harm to consumers.

What you can do to protect yourself from poor financial advice or a potential phoenixed firm?

Research the financial advice firm/financial adviser

  • Check on the Financial Services register whether the firm or individual you are dealing with is regulated by the FCA. If you deal with a firm (or individual) that is not regulated you may not be covered by the Financial Ombudsman Service or the FSCS.
  • Consult the FCA Warning List to check if the firm is known to be operating without FCA authorisation and for any FCA Enforcement decisions/actions against the firm or adviser.
  • Check the Financial Ombudsman Service  website for the firm’s record of complaints to help inform your decision on whether you wish to receive investment advice from the firm.

Don’t be the next victim, you can take control of your own destiny. It is all up to you, some can assist you the get it right.

The London Capital and Finance (LCF) outcome – FCA to ban promotion of speculative mini-bonds to retail consumers

Lesson learned, and actions are taking. The FCA is introducing the restriction without consultation, using its product intervention powers. The restriction will come into force on the 1 January 2020 and last for 12 months while the FCA consults on making permanent rules.

The term mini-bond refers to a range of investments. The ban announced today will apply to more complex and opaque arrangements where the funds raised are used to lend to a third party, invest in other companies or purchase or develop properties. There are various exemptions including for listed mini-bonds, companies which raise funds for their own activities (other than the ones above) or to fund a single UK property investment.

The FCA has limited powers over the, usually unauthorised, issuers of speculative mini-bonds but can take action when an authorised firm approves or communicates a financial promotion, or directly advises on or sells, these products. Alongside this activity, there is evidence of a growing incidence of promotions which are frauds or scams and involve no attempt to meet financial promotion rules. The marketing ban does not apply to such frauds and scams because they are illegal in any event.

The Crypto’s light is already dare (typo error)?

If you are Crypto enthusiast, pro Crypto you can also be optimistic from the following speech giving by Commissioner Hester M. Peirce:

I am concerned about how the SEC has regulated this space, because I believe our lack of a workable regulatory framework has hindered innovation and growth. The only guidance out of the SEC is a parade of enforcement actions and a set of staff guidance documents and staff no-action letters. For example, the SEC’s web page “Spotlight on Initial Coin Offerings (ICOs),” has an “ICO Updates” section that is headlined by enforcement actions brought by the Commission. Only when you click through to “More” do you see other materials. Of particular concern is that these enforcement actions and guidance pieces, taken together, offer no clear path for a functioning token network to emerge. Instead, I support creating a non-exclusive safe harbor period within which a token network could blossom without the full weight of the securities laws crushing it before it becomes functional. By allowing legitimate projects to get their tokens into the hands of a broad set of developers and network users without fear of enforcement, we also would allow the SEC’s Enforcement Division to focus its resources on the fraudulent actors in the realm of crypto offerings.

In a different paragraph she shared the following:

The terms of a settled enforcement action, for example, may turn on considerations that will not be obviously determinative to someone reading the facts set forth in the settlement order. I am thinking of one recent enforcement action that generated quite a buzz in the crypto world because some thought its penalty was too low relative to the amount raised in the offering. Yet, there were some underlying facts that might have argued for the opposite conclusion—that the penalty was too high.


Highlights from the statement of commissioner Jackson

It may be worth think about the following from his statements about:SEC rules give public companies four days before they must notify the market about market-moving business developments, corporate insiders incentives to pursue stock buybacks, and how public companies spend their money on politics:

I believe that a critical part of the SEC’s mission is to make sure that ordinary investors stand on a level playing field in today’s complex markets. Gaps in our securities laws that allow insiders to trade before key information comes to light; pursue stock buybacks that maximize executive pay but not long-run performance; and spend investor money on politics in secret undermine the trust that ordinary Americans have in our financial system. I am delighted that this Committee is considering how best to close those gaps.

On the other hand, not everything is perfect, as you can see below regarding to rollback of the Volcker Rule:

But even if liquidity were quantifiably lower, it would be hard for me to support these changes. Ordinary American investors aren’t kept up at night worrying about an imagined lack of bond liquidity. They’re wondering why they should trust a financial system that upended their lives a decade ago. The benefits of investor trust in our financial markets are hard to quantify, but they’re doubtless a reason why our markets are the envy of the world. Rolling back risk taking protections like this puts that trust at risk, makes ordinary Americans wary of our markets, and—ironically—may even undermine liquidity.

Dialog is always bringing to a better and robust financial market.



Some FCA guidelines which may assist Cryptoasset entrepreneurs

According to the speech by Christopher Woolard, Executive Director of Strategy and Competition at the FCA, delivered at the Cambridge Centre for Alternative Finance annual conference, Judge Business School:

The FCA when faced with novelty, try to gain a crisper view. The FCA asks:

  • What is this thing, why is there a new term and what problem is it trying to address?
  • Who is it for – wholesale banks or retail consumers? Is it within our regulatory scope or outside?
  • Is this really an innovation or just something old in a new, flashy wrapper?
  • Is this potentially to the benefit of consumers and competitive markets or is it likely causing harm by increasing complexity and other risks?

In short, the FCA seeks to consider any cryptoasset, including those labelled ’stablecoin‘, on a case-by-case basis and the FCA encourages both consumers and firms to do likewise.

As the FCA seeks answers to those questions, it expects any would-be cryptoasset issuer to be asking a few of their own before launching a product:

  • Is my product a beneficial innovation for consumers and markets? Or does it include hidden bugs and unmitigated risks?
  • Am I prepared to be open and cooperative with domestic and international regulatory agencies? How do I approach issues like anti-money laundering?
  • Will the target market I have in mind for this cryptoasset be able to make an informed and balanced judgement of the risks and benefits of investing in or using such an asset?
  • Finally, and most importantly, have I completed the regulatory, legal and technical due diligence in advance of launching a new product or service?

In financial services it is vital that innovators get it right the first time round.

When it comes to other people’s money, or safeguarding against terrorist financing, corner cutting is simply not an option.

For those who think the model is to try it in beta for a few million people and see what happens, there may be activities here that are illegal without authorisation in many countries, not just the UK.

The UK has led the rest of the world with developments like the regulatory Sandbox.

One thing that unites those who have been through the Sandbox is the professionalism and preparation shown by the firms involved, who all recognise there is a finite amount of learning through failing fast that can be tolerated when consumers are at risk of harm.

People, it is a good advice, please consider using the FCA sandbox service, you can avoid big legal issues.

The fight against skimmers and scammers speech by the chairman of Britain’s Financial Conduct Authority

Interesting speech, some highlights for you to consider:

How can we make the corporate enablers play their part?

Major companies can effectively enable a huge amount of fraud. The companies which allow people’s personal data to be stolen. The companies which promote advertisements for scams on the internet and thereby profit from these crimes. Quite frankly, they don’t always play their part in remedying the harm they create.

And should the internet service providers, search engines and social media firms be expected to do more to spot and block suspected scammers from using their services? I welcome the decision by Facebook to contribute to the Citizens Advice Scams Action service and to create a scams ad reporting tool, as part of the settlement of litigation against them by Martin Lewis. I hope that Facebook will continue to invest in further anti-scam protections.

And I hope that other internet giants will follow suit. For example, Google searches of ‘high return investments’ continue to reveal numerous very doubtful offers high up the search rankings. We know from the London Capital & Finance case that a large proportion – over £20 million – of clients’ payments to the firm were spent on Google advertising to attract more customers.

The internet giants may argue that it’s too difficult for them to do more, that there are legal complications, or that the internet is too dynamic, changing too rapidly, and that they can’t be obliged to monitor it continually.

Those are fair points. I wouldn’t support imposing unreasonable expectations on the big tech companies but as a minimum I would expect them to take down suspected fraudulent content immediately when requested to do so by the authorities, and ensure that their terms and conditions give them the right to do so. And I would expect them to use their extraordinary resources to work with law enforcement and regulators to develop algorithms and machine learning tools to identify potentially fraudulent content.

I don’t believe that these measures would prejudice freedom of speech. Or that dissent and democracy in our society will be any weaker if we throw some well-aimed grit into the cogs of the online scammers.

The Government’s recent White Paper rightly raises the need for more action to prevent a range of online harms, but doesn’t cover online financial scams which are so devastating. With nearly four million reported cases of fraud a year, and an explosion in online scams, should policy on online harms go wider?

Be aware: SEC Charges ICO Research and Rating Provider With Failing to Disclose It Was Paid to Tout Digital Assets

The Securities and Exchange Commission announced today that Russian entity ICO Rating has agreed to pay $268,998 to settle charges that it failed to disclose payments received from issuers for publicizing their digital asset securities offerings.

The SEC’s order found that between December 2017 and July 2018, ICO Rating produced research reports and ratings of blockchain-based digital assets, including “tokens” or “coins” that were securities, and published this content on its website and on social media. ICO Rating billed itself as “a rating agency that issues independent analytical research,” and stated that its mission is “to help the market achieve the necessary standards of quality, transparency and reliability.” However, ICO Rating failed to disclose that it was paid by certain issuers whose ICO offerings it rated.

“The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting investments so that potential investors are aware they are viewing a paid promotional item,” said Melissa Hodgman, Associate Director of the SEC’s Enforcement Division.  “This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain.”

Conclusion, do you own research, and don’t be a shame to pay to a local investment adviser it can save you a large sum.

investment adviser = only a person with a valid licence.

Valid licence = the name of the person should be listed on website.

By the way, in the UK it is financial advisor +valid licence = the name of the person should be listed on the Financial Services Register, while in Australia it is

Each country has a local list of investment adviser alike, please make sure to check your home country local list, it is your money and your responsibility. If you need help, please let us know via our contact us page, and we will assist you.


Examples for market interventions for our benefit

Rent-to-Own (RTO) market

highly vulnerable group of consumers were paying too much for household goods. Therefore the FCA would:

  • set a total credit cap of 100%, meaning consumers do not pay credit costs that are higher than the price of the product
  • introduce a requirement on firms to benchmark base prices (including delivery and installation) against the price charged by 3 mainstream retailers
  • prevent firms increasing their prices for associated products such as extended warranties to recoup lost revenue from the price cap

Cash savings market

consumers who stay with the same provider for a long time, receive lower interest rates.

The FCA may decide to suggest a basic savings rate (BSR). It is an interest rate that providers would set themselves but would be required to apply to all easy access cash saving accounts and easy access cash Individual Savings Account after they have been open for a set period, such as a year.

Motor finance

The way commission arrangements are operating may be leading to consumer harm on a potentially significant scale.

The widespread use of commission models which link the broker commission to the customer interest rate, and allow brokers wide discretion to set the interest rate, can lead to conflicts of interest. These conflicts are not being controlled adequately by lenders. This can lead to customers paying significantly more for their motor finance.

The FCA also found that where pre-contract disclosures were not always complete, clear or easy to understand. As a result, consumers may not be given sufficient information and explanation to enable informed decisions.

The FCA is assessing the options for intervening in the motor finance market.

Contracts for Difference (CFD) market

The FCA have seen an increase in the number of UK firms offering CFDs to retail consumers. Firms have increasingly offered CFD products to consumers who may not understand the risks of these products or be capable of bearing potential trading losses. For example, firms have offered ‘bonus’ promotions as well as lower margin requirements to attract less experienced retail consumers.

The new rules are intend to restrict how CFDs and CFD-like options are marketed, distributed and sold to retail consumers. This included requiring firms to stop offering inducements to encourage retail consumers to trade and applying minimum margin requirements (leverage limits).