Since last year, Cyprus’ financial regulator has been putting ongoing pressure on all its licensed brokers to adhere to its continuously updated rules, including a blanket ban on deposit bonuses and reduction of leverage. In a freshly released circular to all CIFs (Cyprus Investment Firms), it has now announced that all brokers under their supervision must take new measures to keep their staff in check.
According to a representative for the watchdog, “Aggressive sales techniques deployed by certain firms providing online trading instruments are proven to harm investors and damage consumer confidence in the industry as a whole.”
Hence, they have stated that customer support staff are not allowed to offer any investment advice to traders, but this should be left to qualified professionals. All employees are required to use their real names when interacting with customers and prohibited from providing fake credentials. They are also not to engage in cold calling and other similar hostile sales tactics to push traders to invest money with their company. Any employees who fail to abide by these rules should be reprimanded accordingly by management, including the possibility of dismissal.
Moreover, brokers should not outsource sales activities to third party companies operating outside the EU, but provide such services internally, as other non-EU locations would be unlikely to meet such conditions as required by CySEC.
The regulator has clarified that not complying with these regulations will have serious repercussions for both the company and the member of staff.
The circular, entitled “Obligations of CIFs when providing information to clients on the services and instruments offered” states that CIFs bear the responsibility of making sure all their staff is adequately knowledgeable on these practices in accordance with the MiFID II and furthermore, must ensure ongoing monitoring and maintaining of records in order to fulfill compliance requirements.