FCA Says Only 12% of CFD Firms Changed Charges: How Does Overnight Financing Fees Work?

The Financial Conduct Authority (FCA) surveyed 81 CFD firms in May 2026, six months after its November 2025 multi-firm review, and found that "only 12% of firms said they had changed any charges." Most of the remaining firms explained their existing rates instead of modifying them. The findings, published on 15 October, put overnight financing fees first among the FCA's remaining concerns.

Overnight financing fees combine a benchmark interest rate with a broker's mark-up on the full position value. This structure means that even clients with hedged positions—where long and short positions cancel each other out—can face substantial costs. Charging both legs of a hedge can cost twice the mark-up despite having zero net market exposure.

How Overnight Financing Works

The overnight charge is applied to positions held past a broker's cut-off time, typically 10pm UK time. It consists of two components: a benchmark rate for the currency of the underlying asset and the broker's mark-up. For example, IG's UK charges page puts its CFD admin fee at 1% for FX and 3% for other asset classes, while CMC Markets uses a similar formula with SONIA (Sterling Overnight Index Average) as the sterling benchmark.

The fee is charged on the full notional value of the position, not just the margin posted by the client. This creates a leverage effect where the cost appears small against the position value but can be substantial relative to the client's actual investment. For instance, a £50,000 index position with £2,500 margin could incur annual financing costs of 6.25-7.25%, making the fee represent 30.8-35.8% of the margin over 90 nights.

Hedged Positions Cost More

When clients hold both long and short positions simultaneously, most CFD firms charge financing on both sides regardless of netting status. CMC Markets explicitly states that "holding costs are still charged on both sides regardless of your netting status." This means a client with £50,000 long and £50,000 short in the same index could face a net cost of about £863 over 90 nights—despite having no actual market exposure.

The FCA is particularly concerned about firms that encourage matched positions with reduced or waived margin requirements without adequately disclosing the financing costs involved. The regulator wants clients to understand the trade-offs between maintaining hedged positions and simply closing trades.

FCA's Findings and Next Steps

The 12% of firms that did change their charges implemented four types of modifications: paying interest on cash balances, cutting financing charges on matched positions, reducing charges on outlier product groups, and adjusting calculations to recognize that clients earn nothing on their margin. However, the FCA noted that these changes were "often designed to show that they have complied with the Duty, rather than materially changing their offering."

The regulator is encouraging firms to provide clearer fee disclosures, including dedicated web pages, pop-ups, and deal tickets that explain how charges are calculated. A key recommendation is to restate financing rates as annual figures to give clients a more standardized comparison point. Only a minority of firms have implemented this approach so far.

The FCA has not set a new deadline or rule but has indicated it will follow up with individual firms where concerns remain. The same week, it flagged surveillance gaps at seven retail brokers and announced plans to review appropriateness tests. Two developments to watch in 2027 are whether the FCA's individual follow-ups produce named outcomes and whether interest on CFD cash balances becomes more widespread.