UK financial regulator The FCA has issued an interesting warning to people who invest in Contracts for Difference (CFDs), urging them not to give up vital consumer protections by the FCA, when they are defined as “retail” traders.

The regulator added that in the coming months, the FCA will launch a consultation around client categorisation to ensure the right protections apply for the consumers who need them, and create more freedom for those professional investors who don’t.

High pressure techniques

CFDs are a way to bet on the price of a share or asset moving up or down without owning it. The FCA is concerned that CFD brokerage firms are using high-pressure techniques to encourage investors to claim they are professional clients, putting them at risk of losing more money than they can afford.

The FCA noted that some firms are promoting retail clients to elective professional investor categorisation. Clients’ funds may be moved out of segregated client money accounts, exposing the client to greater risk of loss in the event of firm failure. Others firms are redirecting retail clients to associated CFD providers in third country (i.e. offshore) jurisdictions, without equivalent consumer protections.

The FCA’s retail client protections, including leverage limits and client loss protections, prevent nearly 400,000 people a year from risking more than their original stake in CFDs, and provide between £267 million and £451 million worth of protection.

Finfluencers

The FCA has also found investors are being targeted by finfluencers, who may not make it clear that they are promoting unregulated firms operating offshore. Some of these finfluencers promise consumers unrealistic returns if they copy trades, invest in managed accounts or pay for daily trading tips. Over 90,000 people have lost around £75 million over a 4-year period in this way at just one firm.

Firms must not push elective professional or redirection promotions onto their retail clients. The FCA will take action against firms breaking the rules. The FCA will continue to target finfluencers touting financial services products illegally.

In June 2025, the FCA led an international crackdown on illegal finfluencers that resulted in 3 arrests, 7 cease and desist letters and 50 warning alerts being issued.

Mark Francis, director of sell-side markets at the FCA, said,

“CFDs are complex, high-risk products. The protections given to retail investors under our rules save UK consumers millions each year. We are concerned that some firms are trying to get people to invest more than they can afford to lose. Investors should be very wary of CFD firms attempting to bypass our rules in this way and of those on social media touting investments which look too good to be true.”

Under the Consumer Duty, consumers must receive communications they understand and products and services that meet their needs and offer fair value. The FCA’s InvestSmart campaign has useful tools to help people make more informed investment decisions.