CFD’s are a non-regulated type of derivative trading which allows the investor to trade on the market as it happens but without ownership of the product which the investment is for.
This kind of trading is really for experienced investors who understand the market and are aware of the high risks involved. Unfortunately, many savers were not aware that their money was put into such a high-risk investment.
It seems that sellers of CFD’s often approach inexperienced consumers. The FCA found that the majority of retail consumers lost money that was invested in these schemes.
If your pension savings are tied up in CFD funds through a self-invested personal pension (SIPP), there’s a 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.
Many financial advisers become liable for compensation claims for financial mis-selling.
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.