City watchdog fines 'spread betting' firm
The London market watchdog has fined a leading financial bookmaker £70,000 (€99,000) for running a “misleading” campaign promoting spread betting, it emerged today.
The Financial Services Authority (FSA) said Cantor Index’s flyers, posters and press advertisements did not contain adequate warnings and could have put a large number of customers at risk.
It also said the offer of a free combined computer and mobile phone device may have encouraged less experienced investors to sign up.
Financial spread betting involves gambling on the performance of markets. The bookmaker predicts a range of likely figures – or a spread – and customers bet on whether the actual outcome will be lower or higher.
The FSA said a key risk was that clients could lose far more than their initial deposit, but said warnings included in the Cantor Mobile promotion were not prominent enough.
The scheme – which included a free handheld Xda device – was promoted in a way that attracted the attention of “relatively less experienced investors”.
Cantor was contacted by the FSA soon after the campaign launch and amended adverts within a couple of days.
The watchdog said no customers lost out as a result of the incident.
Anna Bradley, director of the FSA’s retail themes division, said Cantor Index should have paid more attention to the risk posed to investors.
She said: “This should have been done through robust systems and controls.”
Cantor Index said in a statement that it understood and accepted the FSA’s concerns.
It said: “We are pleased that no new or existing clients have suffered any loss as a result of the misleading promotion and we are also pleased that the FSA accepts both in its statement and in its judgement that Cantor Index did everything to correct the promotion once it was pointed out to them.”
It had put in place “rigorous procedures” to prevent a repeat of the incident.
