THE Financial Services Authority has fined one of Britain’s top financial bookmakers £70,000 for running a "misleading" campaign promoting spread betting.
The City watchdog ruled that Cantor Index’s flyers, posters and press advertisements did not contain adequate warnings and could have put a large number of its customers at risk of financial loss.
The FSE also said the offer of a free combined co
mputer and mobile phone device may have encouraged less experienced investors to sign up to its services.
Essentially, financial spread betting involves gambling on the performance of either whole markets or an individual share. 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", the FSA said.
Cantor was contacted by the watchdog soon after the campaign launch. It had amended adverts within a couple of days of that initial contact, the FSA said, adding that none of Cantor Index’s customers had 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 added: "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. The company 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."
The firm said it had put in place "rigorous procedures" to prevent a repeat of the incident.
