FCA stops BDSwiss offering contracts for differences to UK customers
What has happened?
In August 2021, the FCA acted to stop a Cyprus-based trading firm, BDSwiss Holding Plc, and other members of the BDSwiss Group from offering contracts for differences to UK investors. The BDSwiss Group trades using the brands BDSwiss, Swissmarkets and BDS Trading.
The FCA has required BDSwiss Holding Plc, via a First Supervisory Notice, to stop conducting any regulated or marketing activities in the UK and has directed it to take all reasonable steps to stop other members of the BDSwiss Group from doing the same. It has also ordered the firm to close all trading positions and to return the money to UK customers.
What do you need to do?
The BDSwiss Group used the fact that one of its firms was regulated in the UK, via the Temporary Permissions Regime, to convey apparent legitimacy on the group as a whole. However, almost 99% of UK consumers taken on by the group traded through the group’s overseas entities. These overseas firms had no authorisation to provide regulated services in the UK, and consumers who traded with the overseas firms lost the protections given to consumers who trade with an authorised firm. In particular, the overseas firms did not comply with the FCA’s COBS restrictions on the marketing and sale of CFDs to retail consumers.
The FCA identified serious concerns with the sales and marketing practices of the BDSwiss Group, including the use of misleading financial promotions which made unrealistic claims about the likely returns, failed to state clearly the nature of the financial instruments being marketed and failed to outline the risks involved in trading CFDs. The Group and its introducers (known as affiliates) frequently contacted consumers directly using social media platforms to market their products, frequently in the guise of trading signal services.
In many cases, social media showed the affiliates apparently leading an opulent lifestyle which they claimed was being funded through trading and could be emulated, which was not the case. In fact, the affiliates were paid a substantial commission for referring customers to the Group. In a seventeen-month period between 1 January 2020 and 1 June 2021, 129 affiliates were paid a total of £14.7 million for referring 48,038 UK-resident consumers. Five affiliates were paid over £1 million each.
As a result of the activities of the BDSwiss Group and these affiliates, numerous UK consumers lost significant sums of money. Overall, UK-resident clients of the Group lost over 96% of the total monies invested and over 70 clients lost more than £100,000 each.
How can we help you?
If you’d like to know more about how we can help you with your introducer governance, CFD promotional, risk disclosure or social media arrangements, or with any other regulatory compliance issues, including the Temporary Permissions Regime, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.