The Financial Services Authority (FSA) has confirmed that claims at the Financial Services Compensation Scheme (FSCS) relating to failed stockbroker Direct Sharedeal - which could total £13m - will be paid for by investment advisers.
CfDs are highly-leveraged investments which open investors up to increased speculative gains but also large potential losses.
The Glasgow-based stockbroker entered administration in 2011 after alleged mismanagement of CfD investments, with many investors claiming that their accounts were overtraded leading to substantial losses.
A report by the joint administrators of the firm, Finn Associates, last year suggested claims could potentially reach up to £13m.
Compensation costs at the FSCS are paid for by levy payers. Costs are allocated to and divided among a sub-class or group within financial services, based on the activity that has caused the claims.
A spokesperson for the FSA said that they understood from the FSCS that Direct Sharedeal claims would be attributed to the SD02 sub class - which is made up of investment intermediaries.
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