It is not just licensed gambling operators who are increasingly falling under the regulatory microscope, as illustrated for example by the Gambling Commission’s recent letter to all remote casino operators regarding AML and social responsibility failings.
On 10 January, the Financial Conduct Authority (“FCA”) sent a warning letter (that can be downloaded below) to spread betting operators providers, requiring them to resolve failings that may cause significant consumer harm.
The letter follows a review by the FCA that uncovered areas of “serious concern” and “significant weaknesses” resulting in what it said is “a high risk that firms across the sector are not meeting our rules and expectations when providing and distributing CFDs”, ie contracts for differences.
The letter goes on to say: “consumers may be at serious risk of harm from poor practices in this sector. In particular, firms need to improve a number of oversight and control arrangements to reach standards we would consider adequate, given the relevant rules and guidance mentioned throughout this letter. We are concerned that if firms do not address these poor practices, there is a greater risk that consumers will experience poor outcomes through the provision and distribution of CFDs”.
In a separate move, the FCA has today (12 January) published a list of 94 firms (accessible here) that it understands to be offering binary options trading to UK consumers without its authorisation. The list is based upon information that it has received from consumers, partner agencies and from monitoring the binary options market. The FCA states: “Many of these firms claim to be based in the UK but we believe that most of the addresses they provide are false and that the firms are actually based overseas. We are examining each of these firms to determine whether any are genuinely operating from within the UK”. It adds that it is examining each of those firms to determine whether any are genuinely operating from within the UK and, if they are, it will“consider taking enforcement action through the courts to stop their illegal activity”. More information about the regulation of binary options by the FCA with effect from 3 January 2018 can be found on our website here.