The Financial Conduct Authority (FCA) has published a list of 94 firms without FCA authorisation that it understands to be offering binary options trading to UK consumers.
This list is based upon information that the FCA has received from consumers, partner agencies and from monitoring the binary options market.
The FCA said many of these firms claim to be based in the UK but may appeared to be using false addresses while operating from overseas.
The notice comes after the regulator slammed the contracts for difference (CFD) market, having uncovered ‘areas of serious concern’.
Data from City of London police unit Action Fraud showed the amount of money investors have lost through 'binary options' - which mainly target investors through social media - has shot up by 400% in the last six years from £6,200 to £27 million.
Since 3 January this year, firms involved in binary options trading in the UK have been required to be authorised by the FCA.
The FCA said firms that are not authorised by it, and continue with binary options activities beyond that date, will be acting in breach of section 19 of the Financial Services and Markets Act 2000 (FSMA), which is a criminal offence.
Among the firms in the list is 72option.com, which was highlighted in an investigation by consumer group Which? as a firm which employed high pressure sales tactics. Which? also had concern over 72option.com’s terms and conditions.
In its investigation, Which? said: ‘Many had initial bonuses, like 72option.com, which required investors to gamble huge amounts before they had a chance of seeing their money back.
‘Others had clauses that meant customers could only withdraw profits, rather than their initial stake.’
The FCA said it is examining each of these firms to determine whether any are genuinely operating from within the UK.
If they are, the FCA said it will consider taking enforcement action through the courts to stop their ‘illegal activity’.
The regulator said binary option consumers typically lose money, and these losses can be ‘significant’, adding that any consumers who trade with an unauthorised binary options firm will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme should things go wrong.
Firms that are authorised to offer binary options to UK consumers are listed on the FCA’s register.