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 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.

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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.