The UK’s Financial Conduct Authority has issued a warning to Contracts for Difference providers, following a review that found some firms had not met the standards set under the Consumer Duty. The duty, introduced in July 2023, establishes higher expectations for consumer protection across financial services.

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Mark Francis, director of sell-side markets at the FCA, said: "The Consumer Duty raises the bar for consumer protection across financial services and CFD providers must meet those standards."

CFD Providers Criticized Over Fees, Transparency

The FCA noted that some firms had adopted good practices, such as simplifying fee structures and restricting access for investors unlikely to bear losses.

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However, the review identified areas requiring improvement. Firms were found to be failing to consider consumer complaints or satisfaction when assessing fair value. Some had made little or no changes to products or services in response to the Consumer Duty.

The review also highlighted issues with overnight funding charges. Some firms applied varying levels without clear justification, and disclosure of potentially significant costs was inadequate.

Certain providers charged overnight funding separately on matched long and short positions, resulting in ongoing charges with limited benefit to consumers.

CFD Providers Must Improve, FCA States

The FCA said it would engage directly with firms included in the review to drive improvements. It will also consider further work to address identified issues and take action against firms or individuals that fail to meet required standards.

Francis added: "CFDs are complex, risky products and it is vital that providers act to deliver good outcomes for customers, communicate clearly and provide fair value."

He further noted: "It is also important that consumers shop around and ensure they fully understand the investment and its costs."