Abhishek Sachdev, MD of FCA Authorised Derivative advisers, Vedanta Hedging, was interviewed by Risk magazine.
Mr Sachdev was asked about Currency brokers offering unsolicited and unauthorised advice to SMEs for FX hedging.
It’s not just the structures themselves that consultants raise concerns about – it’s the way they are sold. Brokers need to be licensed by a financial regulator to provide financial advice, but Abhishek Sachdev, managing director at treasury and risk management advisory firm Vedanta Hedging, says some unlicensed firms have sought to persuade customers to use more complex products.
“I have had two clients that were given advice when the brokers weren’t allowed to. One time was quite explicit, where a currency broker was offering the client a simple spot transaction, but out of the blue one day another contact within the broker firm rang up the client and said ‘We can offer you more interesting products that will make you more money’. That constitutes giving advice. There’s nothing wrong with forex derivatives, but they should not be advising clients to do them,” says Sachdev.