FCA Imposes Fine on Cypriot CFD Firm for Unfair Practices

The Financial Conduct Authority (FCA) has levied a fine of £276,100 against Forex TB Limited (FXTB), a Cypriot contract for differences (CFD) firm, for failing to treat customers fairly and providing unauthorized investment advice.

FXTB, which also operated under the name Patron FX, was found to have pressured inexperienced customers into risky CFD trading, even encouraging them to borrow money from friends and family. CFDs are complex leveraged financial products used for price speculation on various assets, carrying a high risk of substantial losses.

The regulatory body discovered that FXTB frequently offered investment advice to customers without the necessary authorization. Furthermore, the firm failed to adequately explain the risks associated with CFD trading to its predominantly inexperienced clientele.

In a particularly concerning practice, FXTB was found to have encouraged customers to provide false information to attain 'Professional Client' status. This reclassification stripped these consumers of important protections typically afforded to retail clients, exposing them to higher leverage and increased risk.

Therese Chambers, joint Executive Director of Enforcement and Market Oversight at the FCA, stated, "FXTB's misconduct was particularly egregious since it relied on the exploitation of customers who, because of their inexperience, were particularly vulnerable. By intervening early in April 2021, we helped prevent further consumer losses."

The FCA had initially calculated a fine of £1.215 million but reduced it to £276,100 after FXTB demonstrated that the full amount would cause serious financial hardship.

As part of regulatory action, the FCA required FXTB to cease services to UK consumers on April 12, 2021. The firm's FCA permissions were fully revoked as of October 10, 2023.

This case is part of a broader crackdown by the FCA on high-risk CFD providers. In recent years, the regulator has taken action against multiple Cypriot investment firms and stopped the UK operations of 16 CFD providers that had entered the UK's temporary permissions regime.

The FCA encourages any FXTB customers who believe they experienced the behaviors outlined in the Final Notice to file a complaint with FXTB as a means of seeking compensation.

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