In its efforts to provide a higher level of consumer protection to consumers engaging online contracts for differences (CFDs) brokers, UK watchdog the Financial Conduct Authority (FCA) has acted to stop a Cypriot-based firm, ICC Intercertus Capital Ltd, and other members of its group which trade as EverFX.
Higher level of protection in retail financial markets
The UK regulator has proposed a new Consumer Duty which will put in place a higher level of protection in retail financial markets, ensuring that only the best CFD brokers in the UK are allowed to operate. The EverFX Group used the fact that ICC Intercertus was regulated in the UK to convey legitimacy, however, many consumers were subsequently induced to transact with overseas members of the EverFX Group, which had no authorisation to provide regulated services in the UK, meaning that consumers lacked the same level of protection.
The FCA identified serious concerns with the sales and marketing practices of the EverFX Group, including the use of misleading financial promotions, failing to inform consumers about the nature and risks of CFDs, applying pressure to invest additional funds, instructing clients on which trades to make, and failing to allow customers to withdraw funds. This has led to some consumers losing significant sums of money.
The FCA has stopped ICC Intercertus from conducting any regulated or marketing activities in the UK and has directed it to take all reasonable steps to stop other members of the EverFX Group doing the same. It has also ordered the firm to close all trading positions and return the money to customers.
All forms of trading offer risk
ICC Intercertus was operating in the UK under the Temporary Permission Regime (TPR), put in place for firms who used to operate in the UK under the EEA passporting regime and who wished to continue to operate here following the UK’s exit from the European Union. Firms operate under the TPR until their applications for full authorisation by the FCA can be considered.
It is important to remember that all forms of trading offer risk as well as potential reward. So, before you start exploring the world of CFDs, be sure to do thorough research. COVID-19 and Brexit, as well as the resulting threats to trade and supply chains, could drive a move away from manufacturing toward higher domestic demand. The FCA has taken a range of measures to protect retail traders, including limiting the leverage they can provide to CFD traders and must use a standardised close-out level of 50% of the required margin of a transaction.