Watchdog warns spread betting firms

THE UK’s financial watchdog has sent a warning letter to spread betting firms, saying consumers are “at serious risk of harm” asa result of poor industry practices after finding the majority of customers lost money through their trades.

It follows a review by the Financial Conduct Authority (FCA) into the industry’s use of contracts for difference (CFD) — referring to a type of derivative product that sees investors speculate on whether the movement of the stock will fall below or rise above the respective bid and offer prices quoted by the spread betting firm.