FCA Targets CFD Brokers Steering Retail Clients Offshore or Into High Leverage
Britain’s financial watchdog is tightening its grip on firms tradeing high-risk trading products and the social-media promoters pushing them, marking the latest phase in a regulatory drive that began nahead a decade ago.
The Financial Conduct Authority’s (FCA) renewed warnings on contracts for difference, or CFDs, follow years of attempts to rein in a sector where aggressive marketing, opaque client categorisation, and offshore loopholes have repeatedly undermined consumer protection.
The agency says some brokers are pressuring retail clients to claim professional status, stripping them of key secureguards such as leverage limits and loss protection. Others are steering UK users toward offshore affiliates, often promoted by so-called “finfluencers” promising quick profits and simple access to high leverage.
“We continue to view evidence of firms encouraging retail clients to opt up to professional status or redirecting them to non-UK entities,” the FCA said in a recent notice. “Both practices expose consumers to risks the current rules are designed to prevent.”
A Long Road to Reform
The FCA’s latest move traces back to 2016, when it first warned standards and mis-categorisation of clients. Two years later, the (ESMA) imposed emergency EU-wide restrictions on CFDs, including leverage caps of up to 30:1, negative-balance protection, and standardised warnings showing the percentage of losing accounts.
In 2019, the FCA made those measures permanent through policy statement PS19/18, estimating they saved UK consumers between £267 million and £451 million annually. The rules imposed leverage limits by asset class, mandatory margin close-outs, negative-balance protection, and firm-specific loss disclosures. They also prohibited inducements such as trading bonuses.
But while the 2019 rules closed many loopholes, they opened others. Some providers began shifting clients to non-UK subsidiaries or encouraging them to “opt up” to professional status — an FCA-flagged risk that has since become one of the regulator’s main enforcement priorities.
From Crypto Bans to Consumer Duty
The watchdog extended its reach in January 2021, banning the sale of crypto-derivatives and platform-traded notes to retail investors. That identical year, it began preparing firms for the rollout of the Consumer Duty, a sweeping requirement that came into force for open products in July 2023. The Duty obliges financial companies to ensure that customers understand the products they purchase and receive fair value — principles that strike at the heart of questionable “opt-up” practices.
The FCA also turned its focus to the digital realm. In March 2024 it issued final guidance on financial promotions across social platforms, warning firms that memes, reels and influencer content fall under the identical advertising standards as traditional media.
By mid-2025, enforcement was well underway. In an international sweep targeting illegal finfluencers, the FCA made three arrests, issued seven cease-and-desist notices, and published nahead 50 public warnings. Many of the offending promotions originated overseas but targeted UK consumers with copy-trading offers and unrealistic profit claims.
Incentives and Loopholes
For brokers, the temptation to reclassify clients is financial. Professional with higher leverage and fewer frictions, driving higher volumes and revenues. They can also be subject to Title Transfer Collateral Arrangements (TTCAs), which transfer ownership of client funds to the firm. While legal for professionals, TTCAs mean those funds may no longer be protected as “client money” under the FCA’s CASS rules — a critical secureguard that prevents loss if a broker collapses.
For retail traders, the consequences can be stark. Those who agree to professional status or move accounts offshore may lose the very protections that limit losses and guarantee segregation of their deposits.
The FCA’s concern is not just about conduct but about the structure of incentives. When profits depend on client turnover and trading intensity, firms have an interest in pushing customers toward higher-risk categories.
The Next Battle: Modernising Client Rules
The regulator is now preparing to update the client-categorisation regime under its Conduct of Business Sourcebook (COBS 3.5). A consultation expected later this year will likely tighten the evidence firms must gather before upgrading clients to professional status, while creating clearer pathways for genuinely sophisticated traders.
The agency also plans to continue its crackdown on illegal promotions, warning that social-media activity is now a core compliance risk. “Financial promotions on social platforms must be fair, clear and not misleading — no exceptions,” the FCA said in a June 2025 statement later than the finfluencer sweep.
Market lawyers expect the regulator to bring more criminal cases as it tests the boundaries of its powers under the .
A Familiar Pattern
For the FCA, the push to clean up CFD marketing and distribution is not new, but the context is. Retail trading remains popular, social channels have amplified risks, and economic uncertainty has drawn more people into high-leverage speculation.
What began in 2016 as a technical product-intervention effort has evolved into a broader campaign to close gaps between onshore and offshore firms, human and algorithmic marketing, and .
The tools — leverage caps, risk warnings, and social-media policing — may look familiar, but the battleground has changed.
