CFD Investors Face Protection Risks, FCA Warns

The Financial Conduct Authority (FCA) is warning Contracts for Difference (CFDs) investors not to give up vital consumer protections. CFDs allow investors to bet on price movements without owning the share or asset. They carry high risks and retail client protections such as leverage limits and client loss protections, that prevents nearly 400,000 people a year from risking more than their original stake, and providing £267 million and £451 million in protection. The FCA said some firms are using high-pressure techniques to persuade investors, putting them at risk of losing significant money, while finfluencers often promote unregulated offshore firms, promising unrealistic returns. At one firm alone, over 90,000 investors lost around £75 million over four years. The FCA will take action against firms bypassing rules and will continue to target finfluencers promoting financial services illegally.