FCA Strips Licensing from 21 CFD Brokers in Aggressive Push Against Halo Licensing

Latest Enforcement Actions

The UK's Financial Conduct Authority (FCA) has terminated the regulatory permissions of 21 contracts-for-difference (CFD) providers since the start of 2025, according to reporting by Reuters. In addition, three further firms are in the process of surrendering their licences, and two more are currently under active investigation. The regulator has not publicly identified the companies involved.

The enforcement wave is specifically aimed at firms that maintain only a token presence in the United Kingdom yet leverage the prestige of an FCA authorisation to backstop affiliated operations located overseas. In practice, retail investors who opened accounts through these arrangements believed they were transacting with a domestically regulated counterparty entitled to the full suite of UK investor protections. In reality, the execution and custody of their trades sat with an offshore entity that fell entirely outside FCA oversight.

The 'Halo Licensing' Problem

The FCA first flagged this structural issue in late 2024, when it disclosed that roughly 20 per cent of CFD brokers holding a UK licence were effectively dormant, a category the regulator labelled 'halo' firms. These entities existed primarily to project a veneer of domestic regulation onto foreign operations.

Dominic Holland, the FCA's director of sell-side supervision, emphasised the need for transparency in a public statement, noting that retail customers must be able to identify precisely who their counterparty is and which safeguards apply. He added that the regulator will step in whenever a firm blurs the boundary between its UK-authorised activities and its overseas business lines.

For traders evaluating a new broker, the lesson is clear: an FCA licence listed on a website does not automatically mean the order is being executed under FCA rules. Verifying the exact entity name on the contract, the jurisdiction of the executing desk, and the applicable compensation scheme (such as the FSCS) is essential before committing capital.

A Longer History of Retail CFD Scrutiny

The latest round of enforcement is the most recent chapter in a sustained regulatory tightening that began in 2019, when the FCA, following a European review showing that the majority of retail CFD traders lost money, imposed leverage caps and product-complexity restrictions on sales to individual investors.

Since that landmark rule change, the sector has been subject to repeated supervisory letters and thematic reviews. The introduction of the Consumer Duty framework in 2023, reinforced by additional guidance in late 2025, further obliged providers to evidence fair value to customers and to deliver materially clearer disclosures about product risks.

Sarah Pritchard, the FCA's executive director of markets, made the regulator's posture explicit in a prior letter to CFD providers, warning that it would not hesitate to act swiftly and assertively whenever evidence of customer harm emerged.

The regulator has also drawn attention to the role of so-called 'finfluencers' in funneling retail money toward unregulated offshore CFD platforms. In a report published last year, the FCA detailed a case in which more than 90,000 investors collectively lost approximately £75 million over a four-year period through a single unlicensed provider, underscoring how social-media promotion can amplify the reach of entities operating well beyond the FCA's jurisdictional reach.

Separately, Finance Magnates reported that as of 1 December 2025, 74 brokers retained the ability to offer CFDs to UK retail clients, a figure that continues to shrink as the regulator works through its enforcement pipeline.