Mis-sold CFD Investments

CFDs are a complex investment and not for people who can't afford to lose considerable money. Sadly many are lured by the forecasted huge returns on the small investment, and the risks are often not disclosed or explained until it's too late.

Getting into CFDs is very easy, there are many online platforms for CFD trading some of which are household names. CFD trading is on the rise.

What is a CFD?

When you invest (trade) in a CFD, you never own the underlying asset, you are investing in the asset's price movements. The asset could be a share, currency or commodity, for example. The outcome of your prediction will determine whether you make or lose money. Unless you know all the factors that affect an asset's value, your prediction of the future value of the asset is likely to be a guess, allbeit an educated guess. Many people think that CFDs are not investments but simply gambling.

Health Warning

It would be best to consider that when you trade CFDs, there is always someone or something taking the opposite position. CFDs are not investments where everyone wins: there is always a loser. There are advanced computer solutions and very experienced traders in the market with access to the latest news and forecasts. The average retail trader is likely to lose and lose big.

The Financial Conduct Authority (FCA) found that 82% of CFD client accounts lost money.

Leveraging the Investment

In most cases the investor leverages their trade, some platforms will only make leveraged trades. Leveraging will enable you to multiply the gains from your investment, but it also multiplies your losses.

For example you could be multiplying your potential returns by 10, so an investment of £1,000 could turn into £10,000 in just one trade, a very exciting prospect. However, if the trade is a loss, you will have lost your £1,000 investment and be liable for a further £9,000 of leveraged trade.

As you can see, your debt could very quickly become much greater than your initial investment.

Staying Liquid

The online platforms constantly monitor your account, and if they detect that you cannot service your debt, they may automatically close out all of your active CFDs. Closing your CFDs is likely to increase your losses, so it is vitally important always to have enough money to cover your exposure.

This type of investment model is not for the faint-hearted and requires most investors to keep a constant eye on any movement in trading values whilst the markets are open. Most people don't have the facility or inclination to do this.

FCA Investigations

Investigations by the FCA indicated that most inexperienced retail consumers, who have invested in CFDs, have lost money. With effect from the 1st April 2019 the FCA imposed tougher restrictions on marketing CFD

and CFD like options to retail investors. Many CFD websites now carry "health warnings" about the potential for retail investors to lose money.

Retail Investors

• Are you a retail investor and have lost money?
• Were you contacted out of the blue by a "cold caller" suggesting that you invest? Were you lured in with the promise of amazing returns?
• Did you have little knowledge of these types of investments?
• Did they fail to explain the risks to you?

If you answer yes to any of the above questions, we would like to hear from you.

We know that in some instances, people have been advised by an IFA to invest in this manner or were encouraged to add CFDs to a SIPP, which may result in the IFA or the SIPP provider being liable for losses.

We are also aware of cases where the offer of huge “potential” retuns of CFDs is used as a scam to entice a victim into transferring money to an “investor’s” account which claims to operate the trades. After a small return to reassure the victim, the money is never seen again.

We do expect claims of this nature to be settled fairly swiftly. However, a lot will depend on the complexity of your case, and the information you can provide and whether liability is admitted or denied by the company that encouraged you to invest in this manner.

Why use Lincoln Green Solicitors Ltd to pursue your claim?

We will act for you under a "no win no fee" agreement. Thus, the onus is on us to recover your money for you, and we will not ask you for any upfront fees to pursue your claim. In addition, we are regulated by the SRA.

For more information on how we can help you, please call 0300 303 3819 or fill in and submit the online form on this page.