The Financial Conduct Authority (FCA) has stopped the operations of Cyprus-based forex and CFDs operator Finteractive Limited, known by its tradename FXVC, in the United Kingdom for multiple regulatory violations.
FXVC is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) and is operating in the UK under the local financial watchdog’s Temporary Permission Regime (TPR) following the closure of the Brexit deal in December.
The broker can now no longer offer regulated trading services in the UK. It has to close all open positions and return UK customers’ funds.
Not Disclosing the Risk Profile of CFDs
The British financial market regulator alleged that the broker used a variety of inappropriate techniques to promote its services. “[It] appeared to offer consumers the opportunity to purchase shares in a well-known company and failed to mention that they were actually promoting CFDs,” the FCA stated.
The regulatory notice published on Friday further elaborated that FXVC used misleading financial promotions, and the customers were unclear about the nature of the investments that they were being persuaded to make.
Furthermore, the broker allegedly used pressure tactics to boost customer investments. “The firm used pressure tactics, described by one customer as ‘relentless’, to encourage consumers to invest ever-increasing sums of money,” the notice added.
Additionally, FXVC violated the local rules by encouraging some customers to declare that they were professional investors despite not meeting the necessary criteria for such categorization, according to the British regulator. Professional investors are not restricted to the strict regulatory safety net to the retail traders and can take an aggressive approach with their investments.
This is not the first Cypriot broker to receive a red flag from the UK regulator. Earlier, the FCA took similar actions against several brokerages, including ET Finance and 24option.