The Financial Conduct Authority (FCA) has issued a warning to investors in contracts for difference (CFDs) not to give up consumer protections.

The regulator has raised concerns that firms are using high pressure techniques that encourage investors to claim they are professional clients, putting them at risk of losing more money than they can afford.

CFDs are a way to bet on the price of a share or asset moving up or down without owning it, but as a result carry a considerable risk of substantial losses.

Estimates from the FCA have shown that the retail client protections, including leverage limits and client loss protections, prevent almost 400,000 people a year from risking more than their original stake in CFDs – providing between £267m and £451m worth of protection.

According to the regulator, investors are being targeted by finfluencers, who may not make it clear that they are promoting unregulated firms operating offshore. The FCA suggested that some of these finfluencers promise consumers unrealistic returns if they copy trades, invest in managed accounts or pay for daily trading tips.

Over 90,000 people have lost around £75m over a four-year period in this way at just one firm.

Director of sell-side markets at the FCA, Mark Francis, said: “CFDs are complex, high-risk products. The protections given to retail investors under our rules save UK consumers millions each year.

“We are concerned that some firms are trying to get people to invest more than they can afford to lose. Investors should be very wary of CFD firms attempting to bypass our rules in this way and of those on social media touting investments which look too good to be true.”

The FCA said it would continue to target finfluencers touting financial services products illegally.

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