Tag: COBS rules

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FCA expresses “Serious Concerns” over Complex and Highly Risky Contracts For Difference (CFD) Products Mis-sold to Retail Investors

The FCA has issued a strong warning over widespread mis-selling of complex and risky Contracts for Difference (CFDs) to retail investors, finding poor target market definitions, inadequate due diligence, and weak conflict of interest management among providers. Many unsophisticated consumers suffer significant losses, with 76% losing money, including pension funds unknowingly invested in CFDs. The FCA’s crackdown includes tougher regulations and possible supervisory interventions to protect vulnerable investors. Consumers mis-sold CFDs can seek redress through complaints, the Financial Ombudsman, or legal claims.

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Mis-selling of Unsuitable Financial Products: Credit Suisse Loses S138D FSMA Litigation Case

The High Court ruled in Abdullah v Credit Suisse that the bank mis-sold complex structured products to a conservative Kuwaiti family, breaching statutory duties under sections 138D and 150 of the Financial Services and Markets Act 2000. The court found Credit Suisse failed to assess the clients’ risk tolerance and provided misleading advice, resulting in a $30 million loss. Key defences by the bank, including claims of contributory negligence and financial suicide, were rejected. This landmark case clarifies banks’ obligations under FCA Conduct of Business rules on suitability and fair communication in sales of complex financial products, offering hope for mis-selling victims.