The Financial Conduct Authority (FCA) has acted to stop Cyprus-based BDSwiss Holding Plc, and other firms from the BDSwiss Group, from offering high risk contracts for differences (CFDs) to UK investors.

Having identified serious concerns with the sales and marketing practices of the BDSwiss Group, the regulator has required BDSwiss Holding Plc to stop conducting any regulated or marketing activities in the UK and has directed it to take all reasonable steps to stop other members of the BDSwiss Group doing the same.

Concerns listed by the regulator included the use of misleading financial promotions which made unrealistic claims about the likely returns, failed to state clearly the nature of the financial instruments being marketed and failed to outline the risks involved in trading CFDs.

The FCA has also ordered the firm to close all trading positions and return the money to customers.

According to the regulator, the BDSwiss Group used the fact that one of its firms was regulated in the UK to convey legitimacy on the group as a whole. However, 99% of UK consumers taken on by the group traded through the group’s overseas entities.

These overseas firms had no authorisation to provide regulated services in the UK, and consumers who traded with the overseas firms lost the protections given to consumers who trade with an authorised firm. In particular, the overseas firms did not comply with the FCA’s restrictions on the marketing and sale of CFDs to retail consumers.

Social media showed the affiliates of the firm leading an opulent lifestyle which they claimed was being funded through trading and could be emulated, which was not the case. The affiliates were paid substantial commission for referring customers to the BDSwiss Group.

Sarah Pritchard, executive director, markets at the FCA said: “This group was selling high risk investments to UK investors in breach of our perimeter and the rules for CFDs we have put in place to protect retail investors.

“Many investors were attracted to the firm via social media accounts. Consumers should be very wary of those on social media making promises which look too good to be true and be careful where they invest their money.

“We have acted where we can but once again repeat our call for restrictions on this type of advertising to be included in the Online Safety Bill.”

The FCA has invested almost £2m in its ScamSmart campaign this year, targeting consumers at risk of investment scams, with adverts across search engines and social media sites.

The BDSwiss Group trades using the brands BDSwiss, Swissmarkets and BDS Trading.

BDSwiss Holding Plc 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 European Economic Area 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.