Spread betting companies are not fulfilling the FCA’s requirements

The UK Financial Conduct Authority (FCA) issued a warning letter to firms that offer spread betting contracts, regarding their compliance to the regulatory body’s rules.

UK.- Spread betting firms are under scrutiny after a survey uncovered practices that not only may result in an unjust treatment to customers, but also fails to prevent financial crimes and money laundering.

The UK Financial Conduct Authority (FCA,) sent a warning letter to companies offering spread betting contracts for difference and ‘rolling spot’ foreign exchange products, all categorised as ‘contracts for difference’ (CFD) by the regulatory body. Anti-money laundering controls were deemed insufficient in some cases. The FCA found that the firms offering CFDs take on new clients but don’t give them advice when buying these products. The missive also included a list of best practices with the aim of determining if a CFD is appropriate for a particular client, as spread betting companies instead of assessing this fact, simply asked customers to tick a box to confirm they understood the risks.

Megan Butler, director supervision at the FCA, stated: “These findings also suggest that firms may not be acting in the best interests of their clients and treating them fairly. We also saw evidence of poorly worded risk warnings that did not set out the nature and risks of CFD products in a manner that was clear, fair and not misleading.”