Contracts for difference firms: good and poor practice
AI Analysis
The FCA has published follow-up findings from its May 2026 survey of 81 CFD firms, assessing changes made after its November 2025 multi-firm review of Consumer Duty price and value practices. The regulator remains concerned that overnight funding charges—particularly charges applied to matched or hedged positions—may be excessive, insufficiently justified, and inadequately explained to retail clients; firms should expect supervisory follow-up where their pricing or communications remain outliers.
Key dates
- 2025-11-07
- The FCA published its multi-firm review of CFD providers’ provision of price and value, identifying concerns including narrow fair value assessments, opaque overnight funding charges and charges on matched long and short positions.
- 2026-05-01
- The FCA surveyed 81 CFD firms about changes made or planned after the November 2025 review; the source identifies May 2026 but does not specify an exact day.
Suggested considerations
- Compliance teams may wish to document a comprehensive fair value assessment covering spreads, commissions, overnight funding, ancillary fees, cash-balance interest and all other amounts charged to consumer accounts, rather than focusing primarily on execution costs.
- Firms should consider testing whether overnight funding rates are reasonable against prevailing reference or base rates, relevant UK-regulated peers, the underlying asset class and the benefits delivered, with documented rationale for material outliers and wide long-versus-short spreads.
- Firms may wish to assess separately the treatment of matched or hedged positions, including whether applying the full funding spread to both legs is proportionate where there is no net market exposure and whether any reduced-margin or promotional arrangements encourage clients to maintain costly open positions.
- Firms should consider reviewing client-facing disclosures at each relevant stage of the journey, including onboarding, product pages, deal tickets and account interfaces, and explaining the calculation, rate, frequency, leverage effect and potential cumulative impact of overnight charges in accessible language.
- Firms may wish to present projected overnight costs using an annualised percentage measure alongside daily or monetary charges, while retaining clear explanations that actual costs may vary.
- Appropriateness and target-market processes should be reviewed for robustness, including any income thresholds, enhanced scrutiny, vulnerability monitoring and escalation arrangements introduced after the November 2025 review.
- Firms should consider whether interest paid on client cash or margin balances, and the absence of such interest, has been properly assessed as part of the overall price and value outcome.
- Management information may need to evidence the review of charges, peer comparisons, complaints, customer understanding, vulnerable-client outcomes and remediation decisions because the FCA states it will follow up individually where concerns remain.
What changed
This is supervisory guidance and good-and-poor-practice feedback, not a new binding rule or implementation deadline. The FCA expects firms to assess all costs and charges in their fair value assessments, use relevant UK-regulated peer comparisons, consider consumer outcomes rather than treating fair value as a compliance exercise, and review whether overnight funding rates are reasonable in light of prevailing base rates, peer pricing and the benefits provided. Firms should consider presenting overnight funding costs more prominently throughout the client journey, including on websites, pop-ups or overlays, deal tickets, terms and conditions, applicable Key Information Documents and information required under the Consumer Composite Investments framework; the FCA specifically identifies ann
Compliance impact
The publication materially increases supervisory pressure on CFD firms even though it does not introduce a new rule or deadline. Under the Consumer Duty, the FCA may challenge pricing that is not reasonably related to expected benefits, weak evidence supporting outlier funding rates, inadequate consumer understanding, and communications or incentives that lead clients to incur substantial charges
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original FCA source before acting. Full disclaimer.
What the FCA said
Good practices and areas where firms could do more to meet their Consumer Duty price and fair value obligations. ... In November 2025, we published our findings from a multi-firm review of contracts for difference (CFDs) providers. We outlined how they were meeting the Consumer Duty price and value outcome, and where…
Extract from FCA . Read the full notice at the source for the authoritative text.