The Regulatory Status and Legality of Pocket Option in the United Kingdom

I. Executive Summary

This report details the regulatory standing and legality of the trading platform known as Pocket Option within the United Kingdom (UK). The primary financial regulator in the UK is the Financial Conduct Authority (FCA). A core finding of this analysis is that the FCA implemented a permanent ban on the sale, marketing, and distribution of all forms of binary options to retail consumers, effective from 2 April 2019. This ban reflects the FCA’s view that these products pose significant risks and potential harm to retail investors.

Crucially, Pocket Option, operating under various associated names and websites, is not authorised by the FCA to conduct regulated financial activities in the UK. The FCA maintains a public register of authorised firms, and Pocket Option does not appear on this register with the necessary permissions. Furthermore, the FCA has issued specific public warnings identifying entities operating as “Pocket Option” and “Pocket Option FX” as unauthorised firms actively targeting UK residents.

Consequently, Pocket Option’s operations offering regulated financial services, particularly the banned binary options, to UK retail consumers are illegal under UK financial regulations. UK residents engaging with Pocket Option do so without the critical protections afforded when dealing with authorised firms, namely access to the Financial Ombudsman Service (FOS) for dispute resolution and eligibility for compensation from the Financial Services Compensation Scheme (FSCS) should the firm fail. Dealing with this unauthorised entity therefore carries substantial financial risks.

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II. The UK Financial Regulatory Authority: The Financial Conduct Authority (FCA)

The principal body responsible for financial regulation in the United Kingdom is the Financial Conduct Authority (FCA).¹ Established on 1 April 2013, the FCA succeeded the former Financial Services Authority (FSA) following legislative changes designed to restructure the UK’s financial regulatory framework.¹ The FCA operates as an independent public body, distinct from the UK Government, although it falls under the purview of HM Treasury and Parliament.¹ Its operations are financed through fees levied on the firms it regulates.¹ The FCA is headquartered at 12 Endeavour Square, London.¹

The FCA’s mandate is broad, encompassing several key objectives aimed at ensuring the proper functioning of the UK’s financial markets. Its strategic goal is supported by three operational objectives: protecting consumers, protecting and enhancing the integrity of the UK financial system, and promoting healthy competition between financial services providers in the interests of consumers.² In practice, this involves regulating the conduct of approximately 50,000 to 58,000 financial services firms and markets within the UK, setting standards, and holding firms accountable if they fail to meet these standards.¹

A cornerstone of the UK’s regulatory system is the requirement for authorisation. Nearly all firms and individuals seeking to offer, promote, or sell regulated financial services or products within the UK must obtain authorisation from the FCA before commencing such activities.³ This requirement is enshrined in legislation, primarily the Financial Services and Markets Act 2000 (as amended).³ The scope of regulated activities requiring authorisation is extensive, including dealing in investments (such as buying or selling securities), arranging investment deals, managing investments, providing investment advice, accepting deposits, and operating collective investment schemes, among others.⁶ The authorisation process requires firms to meet specific conditions relevant to their business type and involves the payment of application fees.³

To provide transparency and enable verification, the FCA maintains the Financial Services Register (FS Register). This public database lists firms, individuals, and other bodies that are, or have previously been, authorised by the FCA or the Prudential Regulation Authority (PRA).⁵ Consumers and businesses can use the FS Register to confirm whether a firm is genuinely authorised and to check the specific regulated activities the firm has permission to undertake.⁵ Importantly, the FS Register also serves as a repository for warnings issued by the FCA concerning unauthorised firms that may be targeting UK consumers or operating scams.⁵ The stringent authorisation requirement and the public accessibility of the FS Register create a clear framework: firms offering regulated services in the UK without appearing on the Register with the appropriate permissions are operating outside the bounds of UK law and regulation.

III. Regulatory Stance on Binary Options Trading for UK Retail Consumers

The FCA holds a definitive and prohibitive stance regarding the offering of binary options to retail consumers in the UK. On 29 March 2019, following a consultation period, the FCA confirmed its decision to implement a permanent ban on the sale, marketing, and distribution of binary options to retail clients by any firm operating in or from the UK.¹² These rules officially came into force on 2 April 2019.¹²

This permanent UK-specific ban followed and solidified temporary restrictions that had been previously imposed across the European Union by the European Securities and Markets Authority (ESMA) starting in July 2018.¹² The FCA had supported ESMA’s temporary measures and subsequently moved to make the prohibition permanent within its own jurisdiction, ensuring continuity of consumer protection, particularly in light of the UK’s departure from the EU.¹³

The FCA’s decision to enact a complete ban was driven by significant concerns regarding the nature of binary options and the conduct of firms offering them. The regulator cited widespread evidence of consumer harm stemming from these products, including large, unexpected financial losses suffered by retail investors.¹² Key factors underpinning the ban included:

• Inherent Product Risks: Binary options were deemed inherently risky due to their complexity, lack of transparency in pricing and pay-out calculations, and highly speculative nature.¹² They were often described as financial products where an investor effectively “bets” on a yes/no outcome regarding price movements within a short timeframe.¹⁶
• Poor Firm Conduct: The FCA noted poor conduct among firms selling binary options, frequently involving aggressive marketing tactics (often via online channels and social media), misleading promotions exaggerating profit potential, and significant conflicts of interest, as firms typically acted as the direct counterparty to client trades and thus profited from client losses.¹²
• Product Nature: The FCA explicitly characterized binary options as “gambling products dressed up as financial instruments”.¹² This classification reflects a fundamental judgment that these products do not serve a genuine investment need for retail consumers and may encourage addictive trading behaviours due to their short-term, binary outcome structure.¹³ Historically, before the implementation of the Markets in Financial Instruments Directive II (MiFID II), binary options were indeed treated as gambling products under the purview of the UK Gambling Commission.¹⁷

The scope of the FCA’s ban is comprehensive regarding retail clients. It applies to all firms carrying out relevant activities in or from the UK.¹² Significantly, the FCA’s prohibition deliberately extended beyond the scope of ESMA’s temporary measures by including ‘securitised binary options’.¹² While ESMA had exempted these specific types (defined as listed on a trading venue, subject to a prospectus, with minimum contract periods) from its renewed ban, the FCA concluded they posed the same fundamental risks to investors due to their similar binary pay-off structure and valuation difficulties.¹² Although securitised binary options were not actively sold in the UK at the time, the FCA included them to prevent firms from potentially circumventing the ban by offering slightly different legal forms of the product that carried similar risks.¹² This demonstrates a proactive regulatory approach aimed at closing potential loopholes rather than merely reacting to existing market practices.

The FCA estimated that this permanent ban would save UK retail consumers substantial amounts, potentially up to £17 million annually, by preventing losses from these products, and would also help reduce the risk of fraud perpetrated by unauthorised entities claiming to offer binary options.¹² The unequivocal nature of the ban means that any firm currently offering binary options services to UK retail consumers is operating in direct violation of FCA rules and is, as the FCA itself suggests, highly likely to be a scam.¹²

IV. Pocket Option’s Regulatory Status in the UK

Determining the regulatory status of Pocket Option in the UK requires checking its authorisation status with the FCA, primarily through the Financial Services Register.⁵ The available evidence clearly indicates that Pocket Option is not authorised to operate in the UK.

The FCA has issued specific, public warnings concerning entities operating under the Pocket Option name. One warning targets “Pocket Option FX” ⁸, and another targets “PocketOption”.⁹ Both warnings carry the explicit statement: “This firm is not authorised by us and is targeting people in the UK.”.⁸ These warnings are part of the FCA’s efforts to alert the public to firms providing financial services or products without the necessary regulatory permissions.

The warnings provide specific details associated with these unauthorised operations, including website addresses (www.pocketoptionfx.com, https://pocketoption.com, https://potrade.com/), physical addresses (one in the USA, one in Saint Lucia), telephone numbers, and email addresses.⁸ The FCA cautions that such firms may provide incorrect contact details or change them over time to evade detection or appear legitimate.⁸ The issuance of distinct warnings against entities using variations of the “Pocket Option” name (with one warning updated as recently as November 2022 ⁹) points towards a persistent effort by the operator(s) to solicit UK consumers despite lacking the required authorisation. This pattern suggests an ongoing disregard for UK regulatory requirements rather than an isolated oversight.

As Pocket Option is not authorised by the FCA, it lacks the legal permission to conduct any regulated financial activities in the UK, including the offering of investment services like binary options trading.⁶ Given that binary options are specifically banned for sale to retail clients in the UK, any offering of these products to UK residents by Pocket Option constitutes a direct breach of FCA rules on multiple levels – both lacking authorisation and promoting a prohibited product.

Crucially, the FCA warnings explicitly highlight the severe consequences for consumers who deal with unauthorised firms like Pocket Option. The warnings state unequivocally that consumers dealing with these firms “will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”.⁹ This lack of access to established dispute resolution (FOS) and compensation safety nets (FSCS) leaves consumers highly vulnerable.⁸ These protections are fundamental components of the UK regulatory system designed to safeguard consumers dealing with authorised firms.⁷ The FCA’s emphasis on their absence in the case of Pocket Option underscores the tangible financial risks involved.

V. Official Warnings and International Context

Pocket Option’s lack of authorisation is formally documented on the FCA’s Warning List, which is integrated within or accessible alongside the Financial Services Register.⁵ This list serves as a critical resource for consumers, identifying firms that the FCA believes are operating without the required permissions or are involved in fraudulent activities.³ The FCA strongly advises consumers to consult both the main FS Register and the Warning List before engaging with any financial services firm, particularly if contacted unexpectedly or if the offer seems too good to be true.⁵

The specific details from the FCA warnings concerning entities named Pocket Option are summarised below:

Table: Summary of FCA Warnings for Pocket Option Entities

Firm Name Cited by FCA	FCA Warning Reference	Date Issued/Updated (if available)	Key Warning Message	Associated Website(s)	Associated Contact Details (if listed)
Pocket Option FX	8	Not specified in source	Not authorised by FCA, targeting UK people. No FOS/FSCS protection.	www.pocketoptionfx.com	Address: 866 Scott Street, Greenville, USA, ME 04441; Tel: +19095758363; Email: info@pocketoptionfx.com
PocketOption	9	First published: 29/09/2021; Last updated: 21/11/2022	Not authorised by FCA, targeting UK people. No FOS/FSCS protection.	https://pocketoption.com, https://potrade.com/	Address: C/O LC02 503, Choc Bay, Castries, Saint Lucia; Tel: 02081234499, 02081234499; Email: noreply@po.trade

The regulatory concerns surrounding Pocket Option are not confined to the UK. Financial regulators in other major jurisdictions have also issued alerts regarding this entity.

• In Canada, the Alberta Securities Commission (ASC) added Pocket Option (associated with pocketoption.com) to its Investment Caution List on May 5, 2023. The ASC noted that the firm is not registered to trade in or advise on securities or derivatives within Alberta and advised investors against dealing with unregistered firms due to the lack of investor protections.²⁶
• In the United States, the Commodity Futures Trading Commission (CFTC) placed Pocketoption (pocketoption.com) on its Registration Deficient (RED) List on July 6, 2022. The CFTC stated that the entity operates outside the US, solicits or accepts funds from US customers for products under CFTC jurisdiction (such as binary options), and appears to require CFTC registration but is not registered. The CFTC warns US customers about the limited protections when dealing with unregistered foreign entities.²⁷

The fact that regulatory bodies in Canada and the US have independently flagged Pocket Option for operating without necessary registration or authorisation lends significant weight to the FCA’s warnings. This international consensus suggests a consistent pattern of the firm operating across borders while disregarding local financial regulations and licensing requirements. It reinforces the assessment that Pocket Option’s activities present regulatory risks not just in the UK, but globally.

VI. Conclusion: Legality and Risks of Using Pocket Option in the UK

The analysis of the UK’s regulatory framework and the specific status of Pocket Option leads to clear conclusions regarding its legality and the risks associated with its use by UK residents.

Legality:

1. The FCA has enacted a permanent and comprehensive ban on the sale, marketing, and distribution of all binary options to retail consumers in the UK, effective since April 2019.¹² Offering these products to retail clients is therefore prohibited.
2. Pocket Option is not authorised or registered by the FCA to conduct any regulated financial activities in the UK.⁸ Operating without authorisation is a breach of the Financial Services and Markets Act 2000.³
3. The FCA has issued explicit warnings identifying Pocket Option as an unauthorised firm actively targeting UK consumers.⁸

Based on these points, Pocket Option’s operations soliciting UK retail consumers and offering them regulated financial services, particularly the banned binary options, are illegal under UK law and regulations.

Risks for UK Consumers:

Engaging with Pocket Option exposes UK residents to significant risks, primarily stemming from its unauthorised status:

• Absence of Regulatory Recourse: Consumers have no access to the Financial Ombudsman Service (FOS) to independently resolve complaints or disputes with Pocket Option.⁸ The FOS provides a crucial avenue for redress when dealing with authorised firms.²³
• Lack of Compensation Protection: Funds deposited with Pocket Option are not protected by the Financial Services Compensation Scheme (FSCS).⁸ If Pocket Option were to become insolvent or misappropriate client funds, consumers would likely lose their entire investment with no possibility of recovery through the FSCS, which protects eligible deposits and investments held with authorised firms up to certain limits.²²
• Elevated Fraud Risk: The FCA explicitly warns about the prevalence of scams associated with binary options and unauthorised firms.¹² Dealing with an unauthorised entity like Pocket Option significantly increases the risk of encountering fraudulent practices, such as manipulated trading outcomes, refusal to process withdrawals, or the outright theft of funds.²⁵ Binary options themselves have been widely associated with fraudulent operations globally.²⁸
• Operational Opacity: Operating outside the UK regulatory perimeter, often with potentially misleading contact information, makes it extremely difficult for consumers to verify the firm’s legitimacy, conduct effective due diligence, or pursue legal action if issues arise.⁸

Recommendation:

In light of Pocket Option’s unauthorised status, the illegality of its offering binary options to UK retail clients, the direct warnings issued by the FCA, and the complete absence of regulatory safeguards for consumers, UK residents should unequivocally avoid engaging with or depositing funds with Pocket Option or any of its associated websites. Dealing with authorised and regulated firms is paramount for ensuring consumer protection within the UK financial system.

VII. Disclaimer

This report has been compiled based on information contained within the provided source materials concerning UK financial regulations, the Financial Conduct Authority (FCA), and the regulatory status of Pocket Option. The information reflects the status as indicated within those sources. This report does not constitute financial, investment, or legal advice. Individuals considering any financial transaction or investment should conduct their own thorough due diligence and seek independent advice from an appropriately qualified and authorised financial advisor or legal professional. Regulatory information is subject to change, and users should always verify the current status of regulations and firm authorisations directly with the Financial Conduct Authority through its official website (www.fca.org.uk) and the Financial Services Register (register.fca.org.uk).¹

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