FCA Warns CFD Providers: Deliver Fair Value or Face Action

The Financial Conduct Authority (FCA) has issued a clear warning to Contracts for Difference (CFD) providers after a recent review revealed that several firms are still failing to meet the standards of the Consumer Duty, introduced in July 2023.

The duty was designed to raise the bar for consumer protection across financial services — and while some positive improvements were found, the FCA highlighted significant areas where firms are still falling short.

What the FCA Found

The review noted examples of responsible practices, such as:

• Simplifying fee structures
• Preventing high-risk investors from entering CFD markets where losses may be unaffordable

However, the FCA identified several concerning issues, including firms that were:

• Failing to consider consumer complaints or satisfaction in fair value assessments
• Making minimal or no adjustments to products or services following the implementation of the Consumer Duty
• Applying inconsistent overnight funding charges without clear justification or transparency
• Charging separate overnight funding fees on matched long and short positions — resulting in significant ongoing costs with limited benefit to consumers

Next Steps from the FCA

The regulator will engage directly with the firms included in the review to ensure immediate improvements. Further supervisory work may follow, and the FCA made it clear that it will take enforcement action where firms or individuals do not meet required standards.

Mark Francis, Director of Sell-Side Markets at the FCA, stated:

“The Consumer Duty raises the bar for consumer protection across financial services and CFD providers must meet those standards. CFDs are complex, risky products and it is vital that providers act to deliver good outcomes for customers, communicate clearly and provide fair value. It is also important that consumers shop around and ensure they fully understand the investment and its costs.”

The FCA examined how both large and small CFD providers approach fair value, with a focus on how they disclose costs, justify charges, and deliver outcomes that genuinely benefit consumers.