FCA Stops 16 Suspected CFDs Providers

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FCA Stops 16 Suspected CFDs Providers

<p>  The United Kingdom's <a href="https://www.financemagnates.com/terms/f/financial-conduct-authority-fca/" target="_blank" id="4c85a54d-15e0-4e44-a214-8c55f71cb286_1" class="terms__main-term">Financial Conduct Authority (FCA</a>) informed on Tuesday that it has stopped the operation of 16 contracts for difference (CFDs) operators and has placed restrictions on 17 firms and seven individuals trying to obtain local investment market licenses. </p><p class="MsoNormal">According to the <a href="https://www.fca.org.uk/news/press-releases/fca-places-restrictions-twice-many-consumer-investment-firms-year">most recent press release</a>, the financial market watchdog has halted the continued operation of as many as 16 entities offering <a href="https://www.financemagnates.com/tag/cfds/" target="_blank">CFDs </a>to retail customers. These companies were operating under the UK's temporary permissions regime granted in 2021, but their activities encouraged clients to 'trade excessively' and carried the hallmarks of a potential scam.</p><p class="MsoNormal">In addition, the FCA informed that it had stopped another 17 companies and seven individuals that tried to get licensed in the UK but were accused of phoenixing or lifeboating. Illegal phoenix activity occurs when a new firm wants to continue the business of an existing company after being liquidated. Lifeboating is another form of phoenixing, where directors of an existing company try to setup up a new business and authorize it before the current firm collapses. Compared to 2021, the financial watchdog has placed restrictions on twice as many consumer investment firms this year.</p><p class="MsoNormal">"We want to see a consumer investment market where consumers can invest with confidence, understanding the level of risk they are taking, and where assertive action is taken when harm is identified. We know that it will take time to see the full impact of all our interventions, particularly given the worsening economic environment, but have committed to update each year on the progress that is being made," Sarah Pritchard, the Executive Director of Markets at the FCA, said.</p><p>Part of Consumer Investments Strategy</p><p class="MsoNormal">The FCA's latest actions are part of its updated Consumer Investments Strategy, <a href="https://www.financemagnates.com/forex/regulation/fca-outlines-plan-to-tackle-investment-scams/">originally published in September 2021</a>, which aims to help consumers make better investment decisions and reduce the amount of fraud in the market. The FCA's actions are directly linked to a broader <a href="https://www.financemagnates.com/cryptocurrency/the-fca-announced-a-new-three-year-strategy-digital-assets-are-included/">three-year strategy</a> announced by the regulator in April earlier this year.</p><p class="MsoNormal">As part of its efforts over the past 12 months, the FCA has increased its oversight of high-risk investment cases by 59%. The regulator has published a total of 1,844 warnings on unauthorized firms (a 40% increase), launched an £11 million InvestSmart campaign, and increased visits to the ScamSmart website, which helps combat financial fraud, by 59%.</p><p class="MsoNormal">In early August, the institution <a href="https://www.financemagnates.com/cryptocurrency/the-fca-is-introducing-new-guidelines-on-promoting-high-risk-investments/">published</a> new guidelines for promoting high-risk investments. Interestingly, the rules did not cover the cryptocurrency market.</p>

This article was written by Damian Chmiel at www.financemagnates.com.

Source: FCA Stops 16 Suspected CFDs Providers