The FCA has fined Cypriot contract for differences (CFD) firm Forex TB Limited (FXTB) £276,100 for not treating customers fairly and providing investment advice without authorisation.

According to the regulator, the firm pressured customers to put their money at risk through CFD trading, even encouraging them to borrow money from friends or family in some cases.

FXTB also frequently provided its customers with investment advice, despite not being authorised to do so. 

CFDs are complex leveraged financial products used to speculate on the movement in prices on a wide range of assets. As a result, they carry a considerable risk of substantial losses.

The FCA said FXTB’s customers were inexperienced in trading and did not always understand the risks associated with CFDs, which were also not fully explained to them.

FXTB also enabled customers to become 'Professional Clients' by encouraging them to provide false information. This meant these consumers lost the protections that as ‘retail clients’ they would have had.   

The FCA required FXTB to stop providing services to UK consumers on 12 April 2021. No business in the UK has been conducted by FXTB since this date.

From 10 October 2023, FXTB no longer held any FCA permissions.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said FXTB’s “misconduct was particularly egregious since it relied on the exploitation of customers who, because of their inexperience, were particularly vulnerable.”

The FCA would have imposed a fine of £1.215m, however FXTB demonstrated that this would cause it serious financial hardship.

FXTB also traded as Patron FX.

The FCA has previously taken action in 2020 to stop four Cypriot investment firms from continuing to offer high risk CFDs to UK investors.

It also stopped the UK operations of a further 16 CFD providers that had entered the UK’s temporary permissions regime in 2021.