FCA: The City watchdog has the spread-betters in its sights
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Your support makes all the difference.It looks like the sort of bouncer the South African cricket team was sorely missing during England’s visit, aimed right at the head of the financial spread-betting industry.
The City watchdog has sent out one of those “Dear CEO” letters that the more puffed-up occupants of the fanciest offices find deeply objectionable. It is aimed at those offering contracts for difference, which includes spread bets as well as foreign exchange spot derivatives, and if any of the recipients dislike its chilly opening gambit then they will find the content even harder to stomach.
The Financial Conduct Authority accuses firms of being bad across areas ranging from their approach to anti-money laundering measures, to the checks they’re supposed to perform on the suitability of products for clients, to the risk warnings they’re supposed to issue.
There is context to this. Concerns about the industry have been voiced across Europe. Studies showing that 80 per cent of clients (sometimes more) are losers have given rise to some rather pointed questions about their business models.
Those at the top end mostly obey most of the rules, although they’d be wise to use the letter as a prompt to review their policies and procedures. Those at the fag end might have rather more to worry about.
The really big scandals that sapped the watchdogs’ resources have either been dealt with now or are close to it. That has given them the time and scope to look not so much into the City’s dark corners but those dirty and dusty places under the sofa that are in need of a good clean
This latest shot across the bows of spread- betters and their pals is not before time. And be assured, there will be more to come.
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