Here we go again!  Yet another investment scam where no one seems to understand how it works and yet happily part with vast sums of money before they realise it's too late. I'm always amazed at how easily some people are duped into wanting to make quick money without realising what are they're getting into. 

For anyone that doesn't know what a binary option is and I had to look it up are a form of fixed-odds betting. That alone should be a warning sign.

Binary options traders often advertise on social media – the ads link to websites that are well-designed and professional looking. 

The firms operating the scams tend to be based outside the UK but often claim to have a UK presence, often a prestigious City of London address. 

Scam firms may manipulate software to distort prices and payouts – they then suddenly close consumers’ trading accounts, refusing to pay back their money. 

How to protect yourself

From 3 January 2018 the FCA will regulate binary options in the same way as investment products. Until then they remain a gambling product and are regulated by the Gambling Commission.

This means that if you invest in binary options before 3 January 2018, you won’t have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong.

If you want to invest in binary options, I would strongly recommend that you only deal with firms that are:

  • based in Great Britain with a current licence from the Gambling Commission to offer bets on binary options
  • an EEA firm based in a Member State outside the UK that is authorised to deal in binary options and supervised by its home Member State’s financial services regulator, and which is passporting its services into the UK
  • a non-EEA firm that is appropriately authorised or licensed and supervised in its home country

If you have been scammed

You can report the firm or scam to the FCA on 0800 111 6768.

Because binary options are not regulated by the FCA, your investment is not protected by the UK’s Financial Services Complaints and Compensation Scheme.

If you have already invested in a scam, fraudsters are likely to target you again or sell your details to other criminals.

The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee. 

If you have any concerns at all about a potential scam, contact us immediately.

Always be wary if you’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.

We strongly advise you to get independent professional advice before making any investment.

A fool and his money is easily parted...