Broker Capital.com has started accepting customers to its UK entity again, after pausing onboarding for just over 12 months.
Like several other providers, most notably Trading 212, the company saw a huge surge in activity off the back of the pandemic.
Revenues in the UK rose from £15.4m in 2021 to almost £30m the following year, with similar levels of revenue reported for 2023.
The Financial Conduct Authority, the UK’s financial regulator, targeted several retail-facing brokers – across both share dealing and leveraged products – around that time.
In most cases, the regulator appears to have thought that the systems firms had in place were not commensurate with the level of growth they had managed to achieve.
Is the UK even worth it?
For pure play CFD firms, there is an interesting question as to whether the UK market is even worth bothering with today.
Costs are extremely high and competition is intense. For example, although the UK is not its main market, Plus500’s average customer acquisition cost in the first quarter of this year was over $1,200.
When you add in the fact the FCA seems to keep taking steps to kill the growth of any kind of marketing activity to retail clients, not just in CFDs but across the financial services industry, it can make you wonder what the point is.
Having said that, Capital.com does have the balance sheet to deal with these problems. The company is also rolling out a number of new products in the near future, which can help it both compete and better market its services in markets like the UK.
