The other day I cam across a piece of information regarding NetoTrade who we have featured in a review on this blog. Back about a month ago NetoTrade was the subject of a public warning from the FCA, who stated the following:
This statement is to advise members of the public that an organisation identifying itself to UK citizens as:
NetoTrade UK LTD and NetoTrade Global Investments LTD
788 Finchley Road, London NW11 7TJ
is not authorised under the Financial Services and Markets Act 2000 (FSMA) to carry on a regulated activity in the UK. Regulated activities include, amongst other things, dealing in investments as principal, arranging deals in investments, managing investments, and providing investment advice (‘investments’ include currency options, speculative foreign exchange contracts, contracts for differences). We believe that this organisation may be targeting UK customers and overseas consumers, and claiming to be located in the UK.
What does this mean for you?
If you are an investor, you should be aware that the Financial Ombudsman Service and the Financial Services Compensation Scheme are not available if you deal with an unauthorised company or individual.
How can you check whether a firm is authorised?
To find out whether a company or individual is authorised, go to the FS Register.
This confirms the suspicions we had regarding NetoTrade when we featured them in our review, back then we noted that the website seemed to flick between two different companies NetoTrade UK Ltd and the more mysterious NetoTrade Global Investment Ltd. Both of the companies featured in the warning by the FCA. The FX View has a piece on the NetoTrade issue but falls short of describing the company as scam rather saying they strongly suggest that you only do business with regulated companies. It is totally obvious that you should only do business with regulated entities otherwise your putting yourself at considerable risk, the fact that people still readily deposit cash with brokerages that operate without regulation shocks me. The Instaforex and LibertyReserve situation which happened recently is just another example of why traders shouldn’t operate with brokerages which are not regulated.
Am I willing to call NetoTrade a scam? Not quite as I have no personal experience with the brokerage, though I would echo the views of other people who say that they would never do business with a brokerage that operates unregulated. What is quite bizarre in the case of NetoTrade is that they claim a UK address and openly advertise this on their site but are infact unregulated in the United Kingdom. Again I don’t really see any reason why a brokerage would do such a thing, but then a UK address looks a lot more professional than some random offshore registration.
I had to do this as I was so tempted to see where NetoTrade was actually operating from, so I fired up Google street view and entered the listed address of NetoTrade UK Ltd. and the result was very intriguing. Anyone who does this will find out that NetoTrades UK offices appear to be above a shop along the Finchley road in North London which doesn’t really suggest to me that the company is really operating from the United Kingdom. Again I can’t call out NetoTrade as being an actual scam as I have never done business with them, if your really interested I would take a look at their website to see what you think.