ASIC accepts EU from MDA provider

In a statement issued today, ASIC revealed that online foreign exchange broker Forex Financial Services was found to have been offering an individually managed account (IMA) which was an MDA in breach of its licence conditions.

Forex Financial Services’ AFSL prohibits offering an MDA service to retail clients except through a managed investment scheme.

The ASIC investigation raised concerns that the AFSL holder has “made representations on its website and during presentations to potential clients that were misleading or deceptive”.

ASIC Commissioner Greg Tanzer made broad comments regarding the structure and licensing of MDA services.

“An MDA service allows a broker to enter and exit trades on behalf of a client without seeking the client’s approval,” he said. “Consumers can face significant loss if the service is not provided appropriately.”

Under the terms of the EU, Forex FS will engage an independent compliance expert to conduct a review and will not offer MDA services to retail clients for a period of 10 years.