CFD’s are a type of derivative trading which allows the investor to trade on the market in real time but without ownership of the product which the investment is for.
This kind of trading is really only for experienced investors who understand the market and are aware of the high risks involved. Unfortunately, many investors were not aware that their money was put into such high-risk investments.
It seems that sellers of CFD’s often approached inexperienced consumers. The FCA and Financial Ombudsman Service have found the vast majority of retail consumers lost money invested in these instruments.
If your pension savings are tied up in CFD funds through a self-invested personal pension (SIPP), there’s a significant risk you may have lost a substantial amount of money.
Some financial advisers have been encouraging their clients to transfer their SIPP pensions into these investments in order to earn fees from pension transfers resulting in some investors possibly being able to claim compensation for mis-selling. Those financial advisers become liable for compensation claims for financial mis-selling as and when the investments go sour.
Why Is CFD High Risk?
When you invest in CFDs you are basically handing your money to a professional to make bets for you.
As with most bets, this means your investment can go up or down and more often than not you can often lose more money than you bet in the first place.
CFDs are also not regulated by the FCA (Financial Conduct Authority). The UK’s financial services watchdog does not have any authority over these transactions, meaning there is more potential for mistakes, misconduct, and mis-selling.
What To Do Next
You might be entitled to claim compensation if you have been advised to invest in a CFD investment by a financial advisor without being told of the risks involved.
There is a high chance you may have lost money through negligent financial advice if you have invested into CFDs through a SIPP pension,
The FCS (Financial Services Compensation Scheme) pay compensation to investors who have mis-sold CFD investments via their SIPP pension.
If you believe you have been mis-sold a CFD investment, it is important you receive expert legal advice immediately.