A review by U.K. regulators has found widespread compliance issues at firms that offer trading in contracts for difference (CFD) products, including suitability and disclosure failures.

The U.K. Financial Conduct Authority (FCA) on Tuesday published a letter that details the compliance issues it found, including suitability and disclosure failures.

The letter identifies “several areas of concern”, such as: most of the procedures firms use to assess the suitability of CFDs for particular clients didn’t satisfy FCA rules; most risk warnings that are issued to clients who failed the suitability assessments were not adequate; and anti-money laundering controls in place to manage the risks posed by higher risk clients were insufficient.

“These findings also suggest that firms may not be acting in the best interests of their clients and treating them fairly,” the FCA letter says, adding that this is bringing firms’ compliance into question.

The letter notes that many firms don’t gather adequate information about clients, don’t properly assess clients’ knowledge and experience; and do not assess whether CFDs were appropriate for the client. “We also saw evidence of poorly worded risk warnings that did not set out the nature and risks of CFD products in a manner that was clear, fair and not misleading,” the FCA letter says.

The review also found weaknesses in firm’s anti-money laundering controls.

The one area where the review found good practices was in the categorization of clients. The FCA letter notes that the regulator was concerned that firms were improperly classifying clients as “professionals”, but found that most firms are identifying all of their clients as retail investors, which leads to higher levels of investor protection.

However, overall, the FCA indicates its is concerned about the level of compliance in the sector. “Given the poor results that we observed across our sample, we are concerned that there is a high risk that CFD providers industry-wide are not meeting the requirements of the rules when taking on new clients and/or are failing to do enough to prevent financial crime,” the FCA letter concludes.