FCA bars BDSwiss from providing UK products in the UK

abdelaziz Fathi

Cyprus-based brokerage firm, BDSwiss Holding and its associated brands have been barred from operating in the UK after an investigation found investors were being offered high risk CFDs using affiliate endorsements on social media.

The UK watchdog provided a breakdown and specific details for the regulatory action, saying its decision was taken based on multiple violations of regulations.

According to Britain’s Financial Conduct Authority, BDSwiss Group played up the fact that that one of its firms was regulated in the UK to “convey legitimacy on the group as a whole.” The FCA investigation found that 99% of BDSwiss’ UK consumers were actually onboarded to the group’s entities regulated elsewhere.

The watchdog highlighted its concerns over financial promotions that falsely implied that all of the firm’s activities were regulated by the FCA, when in fact they were not. In particular, the overseas firms did not comply with the FCA’s restrictions on the marketing and sale of CFDs to retail consumers.

The City watchdog explains that these overseas firms are working outside the law and without the proper necessary approvals and licenses.

BDSwiss Group was also flagged after the regulator identified some of the company’s affiliates who allegedly used flashy social media profiles to post pictures of jet-setting lifestyle and claim potential customers can do the same.

“In many cases, social media showed the affiliates leading an opulent lifestyle which they claimed was being funded through trading and could be emulated, which was not the case. In fact, the affiliates were paid substantial commission for referring customers to the Group,” the FCA said.

The FCA estimates that UK investors have lost “significant sums of money” in these investments. It further accuses BDSwiss with not providing customers with sufficient information as to the nature of CFDs products.

On the UK part, the FCA told BDSwiss that it is no longer allowed to solicit or take on new clients from the country anymore, while relations with the existing clients must be terminated, and they must be allowed to close their positions and withdraw their funds.

BDSwiss, which was permitted to operate in the UK through passporting regime, is entitled to seek a review of the FCA’s action. Alongside its FCS-regulated entity, BDSwiss operates several brands regulated by Seychelles’ Financial Services Commission, the Cyprus Securities and Exchange Commission (CySEC), and the Financial Services Commission (FSC – Mauritius).

Sarah Pritchard, executive director, markets at the FCA, said: “Many investors were attracted to the firm via social media accounts. Consumers should be very wary of those on social media making promises which look too good to be true and be careful where they invest their money.”

She continues: ‘Many investors were attracted to the firm via social media accounts.  Consumers should be very wary of those on social media making promises which look too good to be true and be careful where they invest their money. We have acted where we can but once again repeat our call for restrictions on this type of advertising to be included in the Online Safety Bill.’

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