Poland’s KNF Fines XTB $5.5 Million Over CFD Marketing and Suitability Failures

Poland’s financial regulator has imposed a PLN 20 million ($5.5 million) fine on XTB for breaches of investor protection and MiFID II conduct rules related to the sale of Contracts for Difference (CFDs).

The decision by the Polish Financial Supervision Authority covers the period between January 2022 and September 2023, during which the broker was found to have failed key suitability and product governance requirements.

According to the regulator, XTB used client questionnaires that did not properly assess whether users had the knowledge and experience required to trade complex instruments. In some cases, experience with basic financial products was treated as sufficient to approve access to CFDs, despite their higher risk profile.

The KNF also found deficiencies in how the firm defined its target market, noting that criteria used to assign clients to product groups were effectively identical, regardless of the complexity or risk of the instruments involved. As a result, clients without relevant experience were able to access high-risk products.

In addition, the regulator cited misleading and incomplete risk disclosures, stating that clients were not provided with sufficient information to make informed investment decisions. CFDs, which involve leverage and the potential for rapid losses, require clear communication of risks under EU rules.

A further issue involved XTB’s internal “HOT list” of promoted instruments. The KNF said the feature may have created a conflict of interest, as highlighted products often carried wider spreads and generated higher revenue for the broker. The firm did not adequately disclose how instruments were selected or the potential impact on client outcomes.

Under Poland’s regulatory framework, which aligns with EU-wide restrictions, CFD providers must comply with strict leverage limits, negative balance protection, and standardized risk warnings, including disclosure of the percentage of retail clients who lose money. Industry data cited by the regulator indicates that 70% to 80% of retail CFD traders incur losses.

The KNF said the case underscores ongoing concerns around marketing practices and suitability checks in the retail derivatives sector, particularly where complex products are distributed to inexperienced clients.