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UK's Financial Conduct Authority Confirms Permanent Ban On The Sale Of Binary Options To Retail Consumers

Date 29/03/2019

Following consultation feedback, the Financial Conduct Authority (FCA) is today confirming all firms acting in or from the UK are prohibited from selling, marketing or distributing binary options to retail consumers.

The new rulestackle widespread concerns about the inherent risks of these products, and the poor conduct of the firms selling them. This has led to consumer harm in the UK and internationally through large and unexpected trading losses.

The FCAs rules are in substance the same as the European Securities and Markets Authoritys (ESMA) existing, EU-wide temporary restrictions on binary options. However, the FCA is also applying its rules to so-called securitised binary options that were excluded from ESMAs prohibition. Securitised binary options are not currently sold in or from the UK. The FCA thinks these products pose the same risks for investors and so are extending the scope of the prohibition to prevent a market developing for these products.

The FCAs rules are permanent and come into force on 2 April 2019.

The FCA estimates the permanent ban on binary options could save retail consumers up to 17m per year, and may reduce the risk of fraud by unauthorised entities claiming to offer these products.

Christopher Woolard, Executive Director of Strategy & Competition at the FCA, said:

'Binary options are gambling products dressed up as financial instruments. By confirming our ban today we are ensuring that investors dont lose money from an inherently flawed product.'

UK consumers should continue to be alert for binary options investment scams and should only deal with financial services firms that are authorised by the FCA. As the sale of binary options to retail consumers is now prohibited, any firm offering binary options services to retail consumers is likely to be a scam.

For more information on these types of scams or to inform the FCA of a potential investment scam, please refer to the FCA's ScamSmart pages.

Background

  1. Consultation Paper 18/37: Product intervention measures for retail binary options
  2. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  3. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has 3 operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  4. Find out more information about the FCA.