diff --git a/compose/config/config.py b/compose/config/config.py
index 5c614fadc..7abab2546 100644
--- a/compose/config/config.py
+++ b/compose/config/config.py
@@ -1436,15 +1436,15 @@ def has_uppercase(name):
     return any(char in string.ascii_uppercase for char in name)
 
 
-def load_yaml(filename, encoding=None):
+def load_yaml(filename, encoding=None, binary=True):
     try:
-        with io.open(filename, 'r', encoding=encoding) as fh:
+        with io.open(filename, 'rb' if binary else 'r', encoding=encoding) as fh:
             return yaml.safe_load(fh)
     except (IOError, yaml.YAMLError, UnicodeDecodeError) as e:
         if encoding is None:
             # Sometimes the user's locale sets an encoding that doesn't match
             # the YAML files. Im such cases, retry once with the "default"
             # UTF-8 encoding
-            return load_yaml(filename, encoding='utf-8')
+            return load_yaml(filename, encoding='utf-8-sig', binary=False)
         error_name = getattr(e, '__module__', '') + '.' + e.__class__.__name__
         raise ConfigurationError(u"{}: {}".format(error_name, e))