Spread-betting firm hit with fine

SPREAD betting firm Cantor Index has been hit with a £70,000 fine by the City's financial watchdog for a misleading advertising campaign. The promotion offered consumers a free 'Xda' ? a combined handheld computer and mobile phone ? in exchange for signing up to its telephone spread betting service.

The Financial Services Authority said the company failed to adequately highlight the dangers of the investment and targeted consumers who had little experience of spread betting.

Although the adverts contained risk warnings, they were not sufficiently prominent and the FSA could not assume gamblers had read and understood them. The watchdog added that Cantor's senior management failed to ensure there were adequate systems in place to control its financial promotions.

Anna Bradley, director of the FSA retail themes division, said: '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. This should have been done through robust systems and control.'

The FSA said the fine was limited because no customer suffered any loss through the campaign and the company acted quickly to minimise the potential danger.

Bradley added: 'The provision of clear, fair and not misleading financial promotions is a key priority for the FSA because of the potential impact that misleading promotions can have on consumers.

'This is particularly the case in relation to high-risk activities such as spread betting where the key risk is that a customer could lose substantially more than his original deposit.'

Cantor Index was unavailable for comment.