Spread betting firm Cantor Index has been fined £70,000 by the FSA over the way it promoted its services.
The regulator moved to impose the fine after investigating Cantor's use of free mobile phone giveaways and lack of prominent warning noticies on the risks of spread betting in a particular marketing campaign.
The warnings signs were necessary because spread betting carries extra risk for unsophisticated investors that they could lose more than the initial sum invested if bets swing the wrong way.
Even though these risks are outlined again by Cantor before it will allow customers to place bets, the regulator says the company could not "assume customers had read and understood [the warnings]."
"Cantor Index should have paid more attention to the greater potential risk posed to less experienced investors and the greater need to ensure that the risks associated with spread betting were likely to be understood by them," says FSA director retail themes division Anna Bradley.
"This should have been done through robust systems and controls."
The fine could have been higher, but the FSA says it was mitigated by the fact no customer suffered a loss, and Cantor undertook remedial action.IFAonline
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