76% of Users Lost Money in 2016, Firms Under Investigation

  • FCA raises concerns over CFD retail investment tool
  • 76% of users lost money using CFDs in 2016
  • CFDs marketed as an alternative to buying shares with potential for larger bets and returns
  • FCA investigated 34 firms, found majority made a loss
  • Some companies stopped distributing CFDs to retail consumers
  • FCA warns of high risk and potential harm to consumers

The Financial Conduct Authority (FCA) has expressed ‘serious concerns’ over the sale of Contracts for Difference (CFDs) to retail investors. Despite a high percentage of users losing money through this speculative tool in 2016, it remains popular due to its potential for larger bets and returns without capital gains tax or stamp duty. The FCA investigated 34 firms providing CFD products and found that most retail customers made a loss. Consequently, some companies stopped distributing them to consumers. The watchdog warned of high risk and potential harm from poor practices in the sector.

Factuality Level: 8
Factuality Justification: The article provides accurate information about the FCA’s concerns over CFDs, their popularity among investors, and the high percentage of users who lose money using them. It also mentions the investigation conducted on 34 firms and the subsequent actions taken by some companies to stop distributing CFDs to retail consumers. The article is mostly factual with a clear focus on the main topic without any significant digressions or misleading information.
Noise Level: 3
Noise Justification: The article provides relevant information about the concerns of the Financial Conduct Authority over CFDs and their impact on retail investors, as well as actions taken by some companies to stop distributing them. It also mentions the high risk of harm consumers may face due to poor practices in this sector.
Financial Relevance: Yes
Financial Markets Impacted: CFD providers and retail investors
Financial Rating Justification: The article discusses the concerns of the Financial Conduct Authority over CFDs (contracts for difference) and their impact on retail investors, which is a financial topic. It also mentions that some companies have stopped distributing these products to retail consumers due to potential risks and poor practices.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no mention of an extreme event in the last 48 hours.

Reported publicly: www.retailsector.co.uk