76pc lose cash in spread bet firms

THREE in every four punters who gamble on socalled contracts for difference lose money – and in some cases they are throwing away 500 times their initial stake.

The City watchdog yesterday slammed the highrisk spread bets, which allow players to predict whether assets such as shares, commodities and currencies will rise or fall in price.

Guess right and they make money, but huge losses can be racked up if it goes wrong, often vastly exceeding the amount wagered.

The Financial Conduct Authority said 76pc of punters lose cash, and some could lose up to 500 times their stake. In a letter, supervision chief Megan Butler said: ‘Consumers may be at serious risk of harm from poor practices in this sector.

‘Firms need to improve a number of oversight and control arrangements to reach standards we would consider adequate, given the relevant rules and guidance mentioned throughout this letter.’

Shares in spread betters fell – CMC Markets was down 2.3c, or 3.6p, at 154p; IG Group dropped 4.4pc, or 34p, to 745p; and Plus500 was off 5.5pc, or 62p, at 1071p.