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FCA sends ‘Dear CEO’ letter following CFD market review

10/01/2018
Emma Radmore

Following its review of the contracts for difference (CFD) market, the FCA has written to the CEOs of providers and distributors of CFDs to highlight specific concerns. The letter warns that there are areas of serious concern regarding the following areas:

  • target market identification, and alignment to the characteristics of the product;
  • communication, oversight and challenge regarding distribution of the product;
  • providers’ processes for taking on new distributors;
  • arrangements for managing conflicts of interest;
  • use of MIs and KPIs;
  • client categorisation; and
  • remuneration arrangements.

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    The letter asks firms to review their arrangements, processes, systems and controls in the light of the FCA’s concerns. It also refers firms to the new Product Intervention and Product Governance Sourcebook (PROD), which came into effect on 3 January. The FCA notes that firms’ arrangements will be assessed against these new provisions in the future.

    Emma Radmore

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