FCA Flags High Overnight Fees as Only 12% of CFD Firms Change Charges

The UK Financial
Conduct Authority has warned that some CFD brokers may be charging retail
clients excessive overnight funding fees and failing to explain these costs
clearly. The regulator also questioned charges on matched or hedged positions,
where clients hold open buy and sell CFDs on the same asset.

London’s trading industry is coming home!

The findings follow
the FCA’s November 2025 review, which identified inconsistent charges and
weaknesses in how CFD
providers assessed fair value under the Consumer Duty. Finance Magnates
previously examined the regulator’s concerns about consumer protection and the pressure
on brokers to justify their pricing.

The FCA surveyed 81
firms in May 2026 to assess their response to the review. Most had made changes
or planned to do so, but only 12% said they had changed their charges.

Most CFD Brokers Keep Funding Fees
Unchanged

Most firms focused on
explaining existing rates rather than changing them. Measures taken or planned
by the 12% included reducing fees on matched positions, lowering charges for
certain asset groups and introducing interest payments on cash balances.

The FCA said some
funding fees appeared high relative to prevailing base rates and peer
comparisons. Mark-ups remained largely opaque, while only a minority of firms
had added annual percentage rates to help clients compare financing costs.

FCA Demands Clearer CFD Funding Fee
Disclosures

Most firms continued
to apply overnight fees to matched positions, often using the same funding
charge spread as for ordinary long or short trades. The FCA questioned whether
this offered fair value, particularly when firms encouraged matched positions through
reduced or waived margin requirements. Clients may incur additional spreads and
funding fees by keeping both trades open.

The regulator also
called for clearer fee disclosures on websites and deal entry screens,
including explanations of how charges are calculated. It will continue
monitoring firms’ pricing practices and contact individual providers where
necessary.

This article was written by Tareq Sikder at www.financemagnates.com.