Twenty-one CFD firms have closed since 2025 and another three are cancelling their regulatory permissions as the UK Financial Conduct Authority intensifies a crackdown on firms using British authorisation to lend credibility to overseas businesses.
The FCA crackdown, disclosed on September 25, targets firms that conduct little business in the UK but maintain an authorised British entity that can make affiliated overseas companies appear more protected than they actually are.
The regulator’s concern is not simply that international brokerage groups operate through multiple entities. That structure is common across the CFD and foreign-exchange industry. The problem arises when the presence of an FCA-regulated company creates the impression that customers of another group entity are receiving UK regulatory protections when their account is actually held offshore.
The FCA said affected firms have faced measures ranging from restrictions on their trading activities to requirements for independent business reviews. Enforcement investigations have been opened in the two cases the regulator considers the most serious.
The September announcement did not name the 24 firms.
Dominic Holland, the FCA’s director of sell-side supervision, said consumers need to understand exactly which company they are dealing with and what protections apply. The regulator said it would intervene when firms blur the distinction between a UK-regulated operation and affiliated overseas businesses.
The FCA Had Already Identified a Regulatory “Halo” Problem
The closures are the visible outcome of a supervisory campaign that has been developing for years.
In its December 2024 strategy for the CFD sector, the FCA estimated that around 20% of firms in its CFD portfolio appeared to be conducting little or no activity and were therefore making insufficient use of their permissions to justify continuing authorisation.
The regulator said some appeared to exist primarily to provide an FCA “halo” to wider corporate groups. A global customer might see the group advertising an FCA-authorised company and assume that the broker they are opening an account with is supervised in Britain, even though the contractual counterparty is an offshore affiliate.
The issue is particularly important in global brokerage groups because licences attach to specific legal entities rather than entire brands. A group may operate regulated companies in several countries while directing clients in other markets to a separate entity with different rules and protections.
The FCA’s 2024 letter said it expected inactive “halo” firms either to surrender their permissions or demonstrate credible plans to begin meaningful regulated activity. It also said acquisitions of largely inactive authorised companies would receive close scrutiny because buyers could potentially obtain regulatory credibility without building a substantial UK operation from scratch.
The regulator disclosed another striking figure: none of the 100 CFD firms from European Economic Area countries that entered Britain’s Temporary Permissions Regime in January 2021 had gone on to obtain permanent FCA authorisation by the time of the 2024 strategy letter.
What UK Retail Protections Actually Include
The distinction between an FCA company and an offshore affiliate matters because the regulatory differences can affect the economics and risk of the trading account itself.
Since 2019, UK rules for retail CFDs have imposed leverage limits ranging from 30:1 to 2:1 depending on the underlying asset. Firms must close positions when account funds fall to 50% of the margin required to maintain open CFD positions, and retail customers receive negative-balance protection preventing them from losing more than the funds in their CFD account.
The FCA also prohibits firms from using monetary or non-monetary incentives to encourage retail CFD trading and requires standardised risk warnings showing the percentage of a firm’s retail accounts that lose money.
In October 2025, the regulator estimated that retail client protections, including leverage limits and loss protections, prevent nearly 400,000 people each year from risking more than their original stake and provide between £267 million and £451 million of protection.
That warning specifically highlighted firms redirecting customers to affiliated providers in third-country jurisdictions without equivalent protections. The FCA also warned against pressuring retail traders to classify themselves as professional clients in order to bypass safeguards.
Offshore Entities Are Not the Issue by Themselves
There is an important distinction here. Operating an offshore-regulated brokerage company is not automatically evidence of wrongdoing.
International brokers commonly maintain separate entities because financial licences generally stop at national or regional borders. Pepperstone’s Kenya and Mauritius licensing footprint, for example, illustrates how different companies within one group can support different geographic markets without one licence automatically extending to the rest of the world.
Regulatory status can also change while the commercial brand survives. Eurotrader’s shift from Cyprus to Mauritius showed how the entity behind a familiar broker name can move outside a major regulated market even though customers continue seeing substantially the same brand.
Similarly, FXDD surrendered its Malta licence in 2026, ending the regulated European presence that had supported part of its international operation.
The FCA’s current intervention is therefore about presentation and substance: whether a British authorisation reflects a genuine UK business and whether overseas customers are being given an accurate picture of which company actually holds their account.
The Crackdown Changes the Value of an FCA Licence
For the CFD industry, the more interesting consequence is that the FCA appears increasingly unwilling to let authorisation function as a passive marketing asset.
Historically, having an FCA-regulated company somewhere within a brokerage group carried considerable commercial value. British supervision is widely recognised, and an FCA licence displayed on a global regulatory page can reassure customers well outside the UK.
That creates a powerful incentive to retain the entity even when very little revenue is actually generated through it.
The FCA is now effectively saying that regulatory prestige must be backed by regulatory substance.
That raises the cost of maintaining a UK presence. A brokerage cannot necessarily preserve an authorised company indefinitely simply because the licence helps the wider group’s reputation. It may need meaningful local activity, adequate staffing, capital, governance and a credible business plan capable of surviving supervisory scrutiny.
For large brokers with genuine UK businesses, that could ultimately make FCA authorisation more valuable because the regulator is removing firms that use the badge without comparable operating substance.
For smaller international groups, the calculation becomes harder. Maintaining a full UK entity purely for reputational benefit may no longer justify the compliance cost.
For Traders, the Logo Matters Less Than the Account Agreement
The practical lesson is unusually simple.
A broker saying that its “group” is FCA regulated does not answer the most important question. The customer needs to know which exact legal company appears in the account agreement.
If the agreement names the FCA-authorised company, British regulatory protections may apply according to the product and client classification. If it names a company in another jurisdiction, the presence of an FCA-regulated sister company elsewhere in the corporate structure does not automatically extend those protections to the account.
This distinction becomes especially important with CFD brokers because leverage, negative-balance protection, client-money rules, complaint procedures and compensation arrangements can change significantly between jurisdictions.
The FCA’s decision to force 21 firms out, with three more now cancelling permissions and two cases moving into enforcement investigations, shows that the regulator is no longer treating this as primarily a disclosure problem.
It has become a question of whether firms should retain UK authorisation at all.
That is the bigger industry signal from the crackdown. The FCA is narrowing the gap between looking regulated and actually operating a meaningful regulated business. For global CFD groups that have relied on a UK entity as a trust signal while conducting most customer activity elsewhere, that distinction is becoming increasingly expensive to ignore.
Johan Shamshad is a financial markets writer at Dave Finances covering cryptocurrencies, trading platforms, brokers, fintech, financial regulation, and developments across global markets. He previously worked at Gulf News, adding newsroom experience to his coverage of fast-moving financial and digital-asset markets.
His work focuses on identifying market-moving events, company developments, regulatory changes, product launches, and shifts in trading and financial infrastructure.
Johan contributes news and analysis designed to help readers understand not only what happened, but why a development matters and how it may affect the wider financial landscape.