FCA has published its portfolio letter to CFD providers on preparing for the Consumer Duty. As with the other letters, it reminds firms of the implementation timeline and key elements of the duty, with details of the specific application to firms providing CFD, spread bet and rolling sport fx services to retail customers. Among the specific points made in the letter are:
- while relationships with elective professional customers are not subject to the Duty, the process used to determine their status in the first place is subject to the it – FCA is aware that some firms have been encouraging customers to elect to professional status so the Duty can be avoided, and warns that this behaviour would of itself breach the Duty;
- firms in this portfolio must be particularly aware of the risks of high customer losses when considering target markets, and even more so when potentially vulnerable customers are included in the target markets;
- when considering costs, the Duty requires firms to consider expected total costs that consumer will pay, which will include ancillary charges over and above spread charges, and any third party charges;
- that FCA expects CFD firms to use the Duty as a reason to fully review their customer interactions and communications models;
- the firms should specifically consider whether they are causing foreseeable harm if they encourage consumers to put money at risk that they cannot afford to lose and that they do not face unreasonable barriers to acting – in particular it should be easy for them to close positions and accounts and withdraw funds, possibly easier than it is to open positions and accounts in the first place.