FCA has written a Dear CEO letter following its review of new client procedures for firms offering contracts for difference (CFD) products on a non-advised basis. FCA carried out a review of 10 firms and identified several areas of concern across the industry and asks firms to consider their compliance with FCA requirements for sales of CFD products. This review also applies to spread bets and rolling spot FX as CFD products. FCA’s main areas of concern are:
- appropriateness assessments and how firms warn clients if they deem the transaction inappropriate, together with related conduct of business compliance issues; and
- the adequacy of firms’ anti-money laundering systems and controls.
On the positive side, FCA was pleased to note most firms categorised all relevant clients as retail, which would give them the highest level of protection. (Source: FCA Dear CEO – New Client Procedures for CFD Products)