Cypriot brokers earn millions of euros on inactive customers

Information about people who have earned or lost a fortune is usually sent to the public Forex market i CFD. And indeed - more often the profit of a broker who does not place orders on the market is the loss of his clients, but companies also benefit from those who set up an investment account and ... do not conclude any transactions on it.

The Cyprus Securities and Exchange Commission (CySEC) has just reviewed such practices. She checked all Cyprus brokers for charging fees for inactivity on their clients' accounts [see document].

Check it out: Brokers Charging For Inactivity - Fact Sheet

Over 100 euros a month for inactivity

No major irregularities were found, because in all cases the relevant entries were included in the regulations. Most of the fees were also symbolic, but there were also companies that valued their clients' inactivity at over EUR 100 a month! In this case, no reasons were given why the fee would be so high.

CySEC checked the period from July to November 2019. It turned out that at that time there were brokers who earned over 1,4 million euros on inactivity of their clients. What's more, this amount was even 1/3 of the total revenues of some companies over the period considered.

However, all brokers declare that Forex account fees are charged only if this does not result in an overdraft on the account. It even happens that when returning to trade with a given company, the collected funds can be returned or credited towards future commissions.

The regulator wants changes to the contracts

Due to the aggregate high costs incurred by - often completely unconsciously - inactive customers, the regulator called on all companies to change their policy and, above all, to specify this information in their contracts with customers. He also reminded that companies are obliged to immediately remove ambiguities from the regulations and - if possible - to amicably settle disputes with clients.

How to avoid fees for an inactive account

Even if you're just getting ready to trade on the currency market or to trade on stock exchange contracts or commodities, you can avoid paying for an inactive account. Of course, it's best to open it only when you intend to trade on a real account, but if for some reason the account is already available and the amount deposited is waiting for it, then you can avoid fees in three ways.

1. The first and easiest is simply withdrawing all money. However, if the amount is small, it is worth checking in the regulations whether it will not be covered by an additional fee. Eg at a Polish broker XTB only amounts above PLN 500 can be withdrawn free of charge. Once we have withdrawn the entire deposit, the brokerage account will be somewhat "dormant", but each deposit will reactivate it. Thanks to this, however, we will avoid fees for inactivity.
2. You can also fool the algorithms a bit and pretend that the account is active. How to do it? only need to open one, the smallest possible positionand after a while close it. If we are lucky and enter according to the trend, maybe we will even earn on it 🙂 If not and sell, for example, at the same price, then the fee will be more or less the same as for a 0.01 pair EUR / USD it will cost us about PLN 22.
3. The third option is total closing the invoicethat we don't use. However, we recommend this solution only if you are sure that you don't want to trade with this broker anymore. If we change our mind and want to re-open an account with him, then we will have to go through the entire verification procedure from the beginning.