The UK’s Financial Conduct Authority has issued a warning to
investors in Contracts for Difference, urging them not to give up key consumer
protections. CFDs allow investors to speculate on the price of a share or asset
without actually owning it.
Join
IG, CMC, and Robinhood in London’s leading trading industry event!
The regulator highlighted risks from social media
influencers, or “finfluencers,” promoting unregulated offshore firms. Some
promise unrealistic returns for copying trades, investing in managed accounts,
or paying for daily trading tips. At one firm alone, more than 90,000 people
lost about £75 million over four years.
High-Pressure Tactics Risk Client Funds
The FCA said some firms use high-pressure tactics to
persuade clients to claim professional status. This can expose investors to
larger losses than they can afford.
Retail protections, including leverage limits and client
loss safeguards, prevent nearly 400,000 people each year from risking more than
their initial investment. These protections provide between £267 million and
£451 million in value.
FCA Targets Firms Misleading Retail Clients
The FCA said firms must not pressure retail clients into
professional status or redirect them to other promotions. It will take action
against companies that break these rules. The regulator will also continue to
target finfluencers offering financial services illegally.
Under the Consumer Duty, the FCA said investors should
receive clear communications and access products that meet their needs and
offer fair value. Its InvestSmart campaign provides tools and guidance to help
consumers make informed decisions.
FCA Blocks Websites, Apps, Finfluencers
The FCA uses data and technology to tackle unauthorized
financial promotions, blocking
over 1,600 websites and removing more than 50 apps. In 2024, it intervened
in almost 20,000 promotions, cancelled 1,500 firm authorisations, and issued
2,240 alerts on unauthorised firms.
Social media “finfluencers” were targeted, with 20
interviewed under caution and 38 alerts issued. Whistleblowing reports informed
908 supervisory actions, mainly on Consumer Duty breaches. Banks were fined
over £45.5 million for compliance failures.
The UK’s Financial Conduct Authority has issued a warning to
investors in Contracts for Difference, urging them not to give up key consumer
protections. CFDs allow investors to speculate on the price of a share or asset
without actually owning it.
Join
IG, CMC, and Robinhood in London’s leading trading industry event!
The regulator highlighted risks from social media
influencers, or “finfluencers,” promoting unregulated offshore firms. Some
promise unrealistic returns for copying trades, investing in managed accounts,
or paying for daily trading tips. At one firm alone, more than 90,000 people
lost about £75 million over four years.
High-Pressure Tactics Risk Client Funds
The FCA said some firms use high-pressure tactics to
persuade clients to claim professional status. This can expose investors to
larger losses than they can afford.
Retail protections, including leverage limits and client
loss safeguards, prevent nearly 400,000 people each year from risking more than
their initial investment. These protections provide between £267 million and
£451 million in value.
FCA Targets Firms Misleading Retail Clients
The FCA said firms must not pressure retail clients into
professional status or redirect them to other promotions. It will take action
against companies that break these rules. The regulator will also continue to
target finfluencers offering financial services illegally.
Under the Consumer Duty, the FCA said investors should
receive clear communications and access products that meet their needs and
offer fair value. Its InvestSmart campaign provides tools and guidance to help
consumers make informed decisions.
FCA Blocks Websites, Apps, Finfluencers
The FCA uses data and technology to tackle unauthorized
financial promotions, blocking
over 1,600 websites and removing more than 50 apps. In 2024, it intervened
in almost 20,000 promotions, cancelled 1,500 firm authorisations, and issued
2,240 alerts on unauthorised firms.
Social media “finfluencers” were targeted, with 20
interviewed under caution and 38 alerts issued. Whistleblowing reports informed
908 supervisory actions, mainly on Consumer Duty breaches. Banks were fined
over £45.5 million for compliance failures.
This post is originally published on FINANCEMAGNATES.
