The UK’s Financial Conduct Authority has warned firms
to tighten how they sell complex exchange traded products to retail investors,
saying poor risk checks and unclear communications could breach the Consumer
Duty.
Double-Digit Growth in ETP Traders
According to the agency, complex ETPs remain a small but expanding part of the market, with the number of retail traders rising 23% between July 2024 and July 2025, reflecting wider retail investing trends.
Three‑times leveraged ETPs are especially popular on UK exchanges such as the London Stock Exchange, where three of the ten most traded ETPs in December 2025 used 3× leverage
Leverage
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders
Read this Term strategies. The review examined whether distributors offering these products on an execution‑only basis are meeting Consumer Duty standards.
The regulator stressed that complex ETPs are high-risk
investments and often involve leveraged and inverse structures. These products
can reset exposure daily and may behave in ways that diverge from the
underlying index over longer holding periods.
The FCA said these features create a risk that
investors who hold products beyond the recommended period see outcomes that do
not match their expectations.
It found that some firms had detailed
processes to define appropriate target markets, assess customer knowledge and
monitor outcomes over time. Those firms used structured checks on investment
experience and understanding of complex product features before allowing access
for retail customers.
Consumer Duty Expectations for Complex Products
The regulator has now urged firms to review their processes to
make sure they meet Consumer Duty requirements for complex ETPs. It said firms
should strengthen appropriateness assessments so that they test whether
customers truly understand product structures, including leverage, inverse
exposure, daily reset mechanisms and recommended holding periods.
Alongside its work on complex ETPs, the FCA warned last year that investors in CFDs risk losing vital consumer
protections if they allow firms to classify them as professional clients.
Related: Is Consumer Duty the Next Flashpoint Between the FCA and CFD Brokers?
It raised concerns that some firms use high-pressure
tactics to push retail investors into giving up safeguards designed to limit
losses. Under the retail regime, protections such as leverage caps and
loss-limiting measures prevent hundreds of thousands of people each year from
risking more than their original stake in CFDs.
Finfluencers and Offshore Brokers Under Scrutiny
The FCA also flagged the growing role of social media promoters in driving traffic to CFD providers. It said some “finfluencers”
promote unregulated firms operating offshore and may not make clear that they
are pushing services outside the UK’s regulatory perimeter. In some cases, they
promise unrealistic returns if investors copy trades, sign up for managed
accounts or pay for daily trading tips.
The regulator said that at one firm alone more than
90,000 people lost around £75m over four years after following such promotions.
It warned that these patterns show how quickly high-risk products can spread
through social channels when they are marketed with simple narratives and
optimistic claims.
The watchdog reminded firms that they must not
pressure retail clients into elective professional status or encourage them to
open accounts with offshore entities to bypass UK rules. It said it will take
enforcement action against firms that use such tactics to deprive consumer
protections.
The UK’s Financial Conduct Authority has warned firms
to tighten how they sell complex exchange traded products to retail investors,
saying poor risk checks and unclear communications could breach the Consumer
Duty.
Double-Digit Growth in ETP Traders
According to the agency, complex ETPs remain a small but expanding part of the market, with the number of retail traders rising 23% between July 2024 and July 2025, reflecting wider retail investing trends.
Three‑times leveraged ETPs are especially popular on UK exchanges such as the London Stock Exchange, where three of the ten most traded ETPs in December 2025 used 3× leverage
Leverage
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders
Read this Term strategies. The review examined whether distributors offering these products on an execution‑only basis are meeting Consumer Duty standards.
The regulator stressed that complex ETPs are high-risk
investments and often involve leveraged and inverse structures. These products
can reset exposure daily and may behave in ways that diverge from the
underlying index over longer holding periods.
The FCA said these features create a risk that
investors who hold products beyond the recommended period see outcomes that do
not match their expectations.
It found that some firms had detailed
processes to define appropriate target markets, assess customer knowledge and
monitor outcomes over time. Those firms used structured checks on investment
experience and understanding of complex product features before allowing access
for retail customers.
Consumer Duty Expectations for Complex Products
The regulator has now urged firms to review their processes to
make sure they meet Consumer Duty requirements for complex ETPs. It said firms
should strengthen appropriateness assessments so that they test whether
customers truly understand product structures, including leverage, inverse
exposure, daily reset mechanisms and recommended holding periods.
Alongside its work on complex ETPs, the FCA warned last year that investors in CFDs risk losing vital consumer
protections if they allow firms to classify them as professional clients.
Related: Is Consumer Duty the Next Flashpoint Between the FCA and CFD Brokers?
It raised concerns that some firms use high-pressure
tactics to push retail investors into giving up safeguards designed to limit
losses. Under the retail regime, protections such as leverage caps and
loss-limiting measures prevent hundreds of thousands of people each year from
risking more than their original stake in CFDs.
Finfluencers and Offshore Brokers Under Scrutiny
The FCA also flagged the growing role of social media promoters in driving traffic to CFD providers. It said some “finfluencers”
promote unregulated firms operating offshore and may not make clear that they
are pushing services outside the UK’s regulatory perimeter. In some cases, they
promise unrealistic returns if investors copy trades, sign up for managed
accounts or pay for daily trading tips.
The regulator said that at one firm alone more than
90,000 people lost around £75m over four years after following such promotions.
It warned that these patterns show how quickly high-risk products can spread
through social channels when they are marketed with simple narratives and
optimistic claims.
The watchdog reminded firms that they must not
pressure retail clients into elective professional status or encourage them to
open accounts with offshore entities to bypass UK rules. It said it will take
enforcement action against firms that use such tactics to deprive consumer
protections.
