The Financial Markets Authority (FMA) of Austria has continued to face a large number of investigations and enforcement actions into multiple scams and fraudulent operations throughout its domestic financial services industry. After posting its yearly statistics for 2016, the number of legal actions and investigations combating unauthorized businesses has actually decreased relative to the year prior, coinciding with the launch and success of its Investor Warning instrument.
The London Summit 2017 is coming, get involved!
[gptAdvertisement]
The FMA relies on the use of its Investor Warning instrument to help inform the public against fraudulent operations, unauthorized service providers, or possible scams. The system is not unlike measures deployed in other jurisdictions, such as routine warnings from the UK’s Financial Conduct Authority (FCA) ), or Belgium’s FSMA. The recent data supports this measure as an effective counter against scams, with the public being more informed overall and properly warned against unauthorized service providers preying on market participants.
“The investor warning instrument has proven itself to be an effective one. Anyone who is contacted by a provider that they do not know of should immediately check on the FMA Website whether an investor warning has already been published about this provider, and as applicable distance themselves from any business relationship with the provider, and inform the FMA without delay about the offer that they have received,” explained the FMA’s Executive Directors Helmut Ettl and Klaus Kumpfmüller.
“Doing so ensures that the FMA is able to warn about dubious providers quickly, and is thereby able to contain damage being sustained by investors as soon as possible,” they added.
Investigations on the Decline
In particular, the FMA in 2016 did see a decreasing number of total investigations launched into unauthorized businesses (162), which managed to decrease relative to 2015 (218 investigations). Additionally, the FMA concluded approximately 204 investigations in 2016, down from 254 in the previous year. Warnings from questionable providers were also trending lower in 2016, coming in at just 33, compared to 40 in 2015. Finally, criminal complaints ticked downwards to 54 instances in 2016, retreating from 61 cases in 2015.
The diminishing instances of enforcement represent a more insulated environment in Austria’s financial services industry, as well as improvements in warnings and a general increase in public awareness of fraudulent and unauthorized providers – the group’s Investor Warning Instrument has also contributed to this decline, though there is still a large number of threats facing investors.
Identified Threats
While the aggregated statistics can certainly paint a specific picture, the same threats to the Austrian financial services industry remain, i.e. instances of unauthorized providers, promises of unrealistic returns, and a lack of public awareness despite the aforementioned measures. FX trading and CFDs remain the principal assets that have targeted investors, with many individuals falling for impossibly high promised returns.
The FMA’s Executive Board warned: “Such returns cannot be earned or can only be earned by taking extremely high risks und the currently prevailing economic conditions. If something sounds too good to be true, then it generally isn’t true.”
