The Financial Conduct Authority (FCA) has fined Cyprus-based trading broker Forex TB (FXTB) Limited £276,100 for treating customers unfairly and providing unauthorised investment advice.
The City watchdog said it would have imposed a fine of £1.215m, but FXTB demonstrated that such a penalty “would cause it serious financial hardship”.
FXTB “pressured customers to put their money at risk” through contract-for-difference trading, the FCA said. The practice allows traders to speculate on market movements without owning the underlying securities.
The regulator said FXTB had in some cases encouraged customers to borrow money from friends or family, while clients were inexperienced traders and did not always understand the risks tied CFDs, which the company did not fully explain to them.
It added that FXTB also “frequently provided” investment advice to customers despite not being authorised to do so.
FXTB enabled customers to become “Professional Clients” by encouraging them to provide false information, meaning they lost protections that they would have had as “retail clients”, the FCA said.
The company has not conducted any business in the UK since the FCA ordered it to stop providing services to UK consumers in April 2021. From October 2023, FXTB stopped holding any FCA permissions.
“FXTB’s misconduct was particularly egregious since it relied on the exploitation of customers who, because of their inexperience, were particularly vulnerable,” said Therese Chambers, the FCA’s joint executive director of enforcement and market oversight.
“By intervening early in April 2021, we helped prevent further consumer losses.”
City A.M. approached FXTB for comment.