UK consumers are being increasingly targeted by binary options investment scams.

Binary options are a form of fixed-odds betting.

Typically a trade involves whether an event will happen or not (for example, will the price of a particular share or asset go up) and the outcome is either yes or no.

If the investor is correct, they ‘win’ and should see a return on their investment; if they’re wrong, they lose their full investment.

On 3 January 2018 binary options became a regulated investment product.

If you choose to trade in binary options you should use an FCA authorised firm. If you use an unauthorised firm you will be more at risk of a scam and won’t have access to the Financial Ombudsman Service(link is external) or Financial Services Compensation Scheme (FSCS)(link is external) if things go wrong.

We have published a list of firms without FCA authorisation that we understand to be offering binary options trading to UK consumers.

How binary options scams work

Binary options fraudsters 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

Be wary of adverts online and on social media promising high returns from binary options trading.

You should only deal with financial services firms that are authorised by us, and check the Register to ensure they are. You can also check our Warning List of firms to avoid.

You should check the firm isn’t a clone firm by asking for their firm reference number (FRN) and contact details and then calling them back on the switchboard number on our Register – never use a link in an email or website from the firm offering you an investment.

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.