FCA stops 16 firm from selling CFDs to UK investors

The Financial Conduct Authority (FCA) has prohibited 16 firms from selling contracts for differences (CFDs) to UK customers under its temporary permissions regime (TPR).

In a final notice published today, the FCA said it has placed restrictions on twice as many investment providers, compared to last year. The restrictions include preventing firms from promoting and selling certain products or providing specific services like “advice on defined benefit pension transfers.”

This comes after the City watchdog revoked permissions of 17 firms and seven individuals attempting to obtain a new FCA authorisation where phoenixing or lifeboating was suspected. These terms refer to those trying to avoid the consequences of having provided unsuitable advice by moving to or setting up a new firm.

Sarah Pritchard, Executive Director of Markets at the FCA, said: “’In the last year we have maintained our focus on acting assertively and innovatively to tackle harm – we prevented 1 in 5 firms from entering the Consumer Investments market and we have taken action against unauthorised firms with a 40% increase in the number of consumer alerts issued. Setting high standards and acting quickly to crack down on problem firms will help ensure market and consumer confidence, supporting the integrity and growth of UK financial services.”

Britain’s financial watchdog has taken a hardline approach this year to European firms operating in the country under the temporary permissions regime (TPR). Explaining the rationale behind the move, the watchdog said these firms, despite multiple opportunities, did not respond to mandatory information requests. The FCA further warned other European companies that if they wish to remain in that they need to meet its standards.

The FCA has gained a new power to vary or cancel regulatory permissions held by firms that are not using them, via a faster process. The power reflects the FCA’s intention to become a more assertive regulator.

The Temporary Permissions Regime (TPR) was designed to mitigate potential risks of a ‘no-deal Brexit,’ where the passporting regime falls away abruptly. This scenario meant that there will not be a transition period in place when the UK withdraws from the EU, i.e., the UK becomes a ‘third-country’ in relation to the bloc.

As such, the regime ensures that European firms operating in the UK via a passport when the Brexit transition period ended could continue operating temporarily while they seek full authorisation in the UK. This permission, however, can be cancelled if firms miss their “landing slot” or have no intention in applying for full authorisation.