Britain’s financial regulator today published a letter to the CEOs or equivalent of all authorized CFDs providers, urging them to ensure their investors have all information necessary to properly assess the regulatory coverage attached to their products.
FCA Voices Concerns About CFD Brokers’ Practices
The UK’s financial watchdog warned that consumers may be at serious risk of harm from poor practices in the contract for difference sector. FCA added it has “serious concern” about the sale of CFDs and other speculative products that are popular with retail investors even though around 80 percent of users lose money on them.
FCA Voices Concerns About CFD Brokers’ Practices
Announcing the findings of a review into the market for selling the instruments, the regulator said the review uncovered areas of serious concern that we want to highlight to firms across the industry.
FCA Voices Concerns About CFD Brokers’ Practices
Specifically, the FCA has seen examples of fake celebrity endorsements, the use of pressure-sales tactics to persuade people to invest increasing amounts of money and inducements being given to customers to upgrade to elective professional status despite clients not meeting the criteria and losing protection under the rules. The FCA has also seen some firms giving investment advice without authorisation.
FCA Voices Concerns About CFD Brokers’ Practices
Sarah Pritchard, Executive Director of Markets at the FCA said: “We have set out the standards we expect CFD firms to demonstrate in order to protect consumers and ensure market integrity. CFD providers authorised in our regime must sell products appropriately, and when the new consumer duty comes into effect, will need to ensure that products deliver good outcomes for retail consumers. We will not hesitate to take swift and assertive action where we identify harm.”
FCA Voices Concerns About CFD Brokers’ Practices
The FCA’s statement also reminds regulated firms about their obligations when communicating with clients, and strongly encouraging them to review their websites and…
FCA Voices Concerns About CFD Brokers’ Practices
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