FCA Tightens Oversight of High-Risk Trading and Social Media Promotions

The UK’s Financial Conduct Authority (FCA) is stepping up scrutiny of firms offering high-risk trading products and the social media influencers promoting them, marking the latest phase in a long-running effort to strengthen retail investor protections.

In a recent notice, the regulator reiterated concerns about contracts for difference (CFDs), citing evidence that some brokers continue to pressure retail clients to reclassify as professional traders or redirect them to offshore entities. Both practices remove key safeguards such as leverage caps and loss protection.

“We continue to see evidence of firms encouraging retail clients to opt up to professional status or redirecting them to non-UK entities,” the FCA said. “Both practices expose consumers to risks the current rules are designed to prevent.”

Regulatory Background

The FCA’s current campaign builds on a series of interventions dating back to 2016, when the agency first raised concerns over poor onboarding and client categorisation. In 2018, the European Securities and Markets Authority (ESMA) introduced EU-wide CFD restrictions, including leverage limits and negative balance protection.
The FCA later made these measures permanent in 2019 under policy statement PS19/18, estimating annual consumer savings of between £267 million and £451 million.

Despite these efforts, some firms have since sought to bypass restrictions by moving clients offshore or reclassifying them as professionals — trends that have become a focus of enforcement action.

Expanding Oversight

In January 2021, the FCA banned the sale of crypto-derivatives and exchange-traded notes to retail investors. The watchdog also introduced the Consumer Duty in 2023, requiring firms to ensure clients understand products and receive fair value. The Duty directly targets practices such as inappropriate “opt-up” recommendations.

The regulator has also intensified oversight of online financial promotions. Updated guidance issued in March 2024 clarified that influencer content, memes, and short videos must comply with existing advertising rules.
By mid-2025, the FCA had made three arrests, issued seven cease-and-desist orders, and published nearly 50 public warnings targeting illegal “finfluencer” activity.

Incentives and Risks

Brokers have financial incentives to reclassify clients, as professional accounts allow higher leverage and reduced restrictions. Such clients can also be subject to Title Transfer Collateral Arrangements (TTCAs), which transfer ownership of client funds to firms, removing them from standard client money protections under FCA rules.
For retail clients, opting up or moving offshore can mean losing safeguards that limit losses and ensure fund segregation.

Next Steps

The FCA plans to review its client categorisation framework under COBS 3.5 later this year. The upcoming consultation is expected to tighten evidence requirements for professional reclassification and clarify rules for sophisticated investors.
The regulator also confirmed it will maintain pressure on firms using social media for promotions. “Financial promotions on social platforms must be fair, clear and not misleading — no exceptions,” it said in June 2025 following a coordinated enforcement campaign.

Market lawyers expect the FCA to pursue more criminal cases as it tests the limits of its authority under the Financial Services and Markets Act.

A Continuing Challenge

The renewed crackdown underscores the regulator’s broader challenge: adapting legacy protections to a digital marketplace. While the tools — leverage limits, risk disclosures, and promotional restrictions — remain familiar, the rise of social trading and influencer-driven marketing has shifted the landscape.

What began nearly a decade ago as a technical intervention in CFD markets has evolved into a wider campaign to close regulatory gaps between onshore and offshore entities, human and automated marketing, and retail and professional clients.