XTB under the supervision of the Polish Financial Supervision Authority. A million-dollar fine after detecting errors in investor service
Polish Financial Supervision Authority (KNF) imposed a fine on XTB in the amount of PLN 20 million. The decision concerns violations committed by the broker in the period from January 1, 2022 to September 2023.
The regulator pointed to several areas in which the company did not meet the requirements for investment companies.
One of the main allegations is the inappropriate verification of the competences of people interested in brokerage services. XTB did not properly determine whether potential clients had the knowledge and experience allowing them to make informed investment decisions.
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The regulator also questioned the broker's information practices, pointing to the provision of unreliable and misleading data.
Problems with verifying customer knowledge and the HOT list
The Commission also identified a problem with the lack of specification of the target group for the products offered. The company did not specify precisely to which investor profile its services are addressed. The regulator drew attention to issues related to the publication of the HOT list, which XTB makes available to its clients as a set of instruments attracting the greatest market interest at a given time.
According to the Polish Financial Supervision Authority, the broker did not adequately describe the circumstances that could lead to a conflict of interest in connection with this list. The policy adopted by the company did not allow clients to recognize potential conflicts resulting from the algorithm for selecting instruments to the list. Particular reservations concerned the promotion of products generating a higher spread, which translated into potentially higher revenues for the company.
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According to the regulator, all identified irregularities caused XTB to conduct its business in an unreliable and unprofessional manner. The Polish Financial Supervision Authority emphasized the importance of full compliance of market practices with applicable regulations, especially in the context of protecting retail investors purchasing complex financial instruments.
High risk and losses on CFDs
The Commission noted that CFDs are characterized by an increased level of risk. These products should only be sold to people who have appropriate knowledge and accept the possibility of losing all invested funds.
The regulator referred to its own research showing that from 70 to 80 percent. It systematically loses customers on the Forex market on transactions with this type of instruments.
In the submitted statement, XTB indicated that the decision is not final and the company analyzes the content of its justification in detail. The broker does not rule out taking further legal steps. The company emphasized that the decision was not immediately enforceable, which means there is no obligation to pay a penalty before the decision becomes final.
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The company added that both the registration form and the onboarding mechanism have already been changed in accordance with the guidelines of the Polish Financial Supervision Authority. XTB is an international investment broker that allows investing in shares and ETF funds and trading CFDs on currencies, raw materials, indices and cryptocurrencies.
