Soured forex, crypto-currencies deals are trending

● Promises of quick and easy money

Consumers are increasingly being lured on social media to invest in forex platforms or cryptocurrencies.

More often than not, the forex platforms turn out to be scams, says Naresh Tulsie, outgoing ombudsman for financial services providers.

Tulsie says there has also been an increase in complaints about “copycat” forex traders — individuals who are not registered as financial services providers but offer you the “opportunity” to copy their trades for a fee.

These operators don’t care whether forex is suitable to your needs, and take no responsibility for any of the “losses that invariably occur without any substantial explanation or justification”, the ombudsman says.

Tulsie also warns against those who try to circumvent the law by offering forex training software with the promise of turning you into a forex trader. After you’ve signed up, the same entity is likely to offer you a broker service with no liability in the event of losses.

Crypto complaints

An increasing number of complaints about cryptocurrency investments, especially in bitcoin, show that these are being marketed as mainstream investments, but investors are not warned about the lack of regulation or the risks involved, and at times are lured with supposed “guarantees” on their investments in these volatile currencies, the ombudsman says.

“Investigations into a few matters are at an advanced stage, and this office is looking to issue its first determination on this type of investment early in the new year,” the annual report says.

Tulsie says that if an adviser – or even your lay-person friend – advises you to invest in a cryptocurrency that turns out to be an unsuitable investment or a scam, you could potentially have recourse through the ombudsman’s office.

He says “it would depend on the actual circumstances and facts of each individual matter” but points out that under the Financial Sector Regulation Act, the provision of financial advice, whether by a licensed entity or person or not, falls within the ambit of the ombudsman’s office.

Irlon Terblanche, CEO of Blockchain Capital, says SA is trying to develop regulations for crypto-asset activities. However, until such time as regulations are in place, you are vulnerable.