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Choosing an FCA-regulated broker can reduce some of the risks involved in opening a UK trading account, but the label is not a guarantee that a broker is safe, cheap or suitable for you. The important question is whether the exact legal entity is currently authorised by the Financial Conduct Authority (FCA), has permission for the product you want to trade, holds your money under the relevant rules and provides the protections that apply to your account.
That distinction matters because a broker may advertise several services under one brand while different companies handle execution, custody, client money or overseas customers. FCA authorisation should therefore be the starting point for comparing brokers—not the end of the research.
What FCA regulation means for a UK trading customer
The FCA authorises firms to carry out specified regulated activities. A firm authorised to arrange investments may not necessarily be authorised to offer spread betting, CFDs, portfolio management or every other service shown on its website.
There is also a difference between being authorised and being registered. A registered firm may meet particular registration requirements without having FCA permission to provide all regulated financial services. The FCA advises consumers to check that a firm’s permissions match the service being offered.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchFor a broker, the relevant permissions may include:
- dealing in investments or arranging investment transactions;
- share dealing and investment-platform services;
- spread betting;
- contracts for difference (CFDs);
- rolling spot foreign exchange;
- portfolio management or investment advice;
- holding or controlling client money; and
- approving or communicating financial promotions.
You can verify this through the FCA Financial Services Register and the FCA Firm Checker. Authorisation reduces regulatory risk, but the FCA explicitly says it does not remove all risk.
Why use an FCA-regulated broker?
1. The broker must meet regulatory standards
Authorised firms are subject to FCA rules covering their governance, systems, conduct and permitted activities. This gives a customer more information and recourse than dealing with an unregulated firm or an unknown offshore provider.
It does not mean the FCA has approved a broker as “the best” or assessed every trade as suitable. The FCA is a regulator, not a broker-ranking service. You remain responsible for deciding whether a product is appropriate and whether you can afford the potential loss.
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2. Consumer Duty creates conduct obligations
Firms within the scope of the FCA’s Consumer Duty must act to deliver good outcomes for retail customers. The Duty covers four broad areas:
- the design and suitability of products and services;
- price and value;
- consumer understanding; and
- customer support.
The FCA’s cross-cutting rules require firms to act in good faith, avoid foreseeable harm and support customers in pursuing their financial objectives.
This is not a promise that an investment will make money. An execution-only broker does not generally have to recommend a profitable share or stop you from making a poor investment decision. Consumer Duty concerns the firm’s products, pricing, communications and support—not the performance of the market.
3. Client-money rules can protect assets if a firm fails
Where a broker holds or controls client money or safe-custody assets, it may have to follow the FCA’s Client Assets Sourcebook, known as CASS. These rules are designed to keep customer money and investments separate from the firm’s own assets and to support an orderly return if the firm fails or leaves the market.
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CASS is not an unconditional guarantee that every customer will be repaid in full. The outcome can depend on the firm’s records, the type of asset, the custody structure, any shortfall and whether the particular activity falls within the client-assets regime.
Before opening an account, check:
- which legal entity holds your cash;
- where shares or other assets are custodied;
- whether cash is treated as client money or deposited through another arrangement;
- whether the broker lends securities or uses omnibus custody; and
- what happens to your positions if the broker becomes insolvent.
4. You may have access to complaints and compensation schemes
If a regulated broker treats you unfairly, you normally complain to the firm first. If the issue is not resolved, the Financial Ombudsman Service (FOS) may be able to investigate eligible investment complaints involving an FCA-regulated business.
The Financial Services Compensation Scheme (FSCS) is separate. For eligible investment claims involving a firm that failed after 1 April 2019, protection is generally up to £85,000 per eligible person, per firm, subject to the relevant rules.
FSCS protection does not cover ordinary investment losses. A falling share price, losing CFD position or unsuccessful trading strategy is not normally an FSCS claim. The firm, activity, product and circumstances must all qualify.
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Do not rely on an FCA logo, reference number or regulatory claim displayed on a broker’s website. Clone firms copy the names, reference numbers and branding of legitimate companies.
Quick check: FCA Firm Checker
- Open the FCA Firm Checker.
- Select “Check a firm”.
- Search for the broker’s name.
- Confirm that the result says the firm is authorised.
- Check that its permissions cover the exact service you intend to use.
The Firm Checker is useful for a first check, but it does not confirm that FOS or FSCS protection definitely applies to your account.
Detailed check: Financial Services Register
For more information, go to the FCA website and select Registers and Systems → Financial Services Register. The search page includes the field “Enter a name or reference number”, an optional postcode or town field, a “Show me first” selector and options for firms or individuals.
Record the following details from the result:
| Check | What to verify |
|---|---|
| Legal name | It matches the company named in the account agreement. |
| Status | The firm is currently authorised, rather than no longer authorised or revoked. |
| FRN | The FCA reference number matches the number quoted by the broker. |
| Permissions | They cover shares, investments, CFDs, spread betting, FX or the relevant service. |
| Client money | The Register indicates whether the firm can hold or control client money. |
| Contact details | The website, telephone number, email and address match the Register. |
| History | Review any warnings, restrictions, fines or other regulatory information. |
Use the phone number and web address shown on the Register—not details supplied in an unsolicited email or online advert—to confirm that you are dealing with the genuine firm.
Appointed representatives need extra checking
Some brokers operate as appointed representatives (ARs). An AR conducts activities on behalf of a principal firm, which agrees the activities it may carry out and is responsible for that business. An AR can have more than one principal.
If a broker is an AR, check:
- the AR’s exact registered name;
- the principal firm;
- the activities permitted by the principal;
- the company that contracts with you;
- the entity holding your money; and
- whether FOS and FSCS protection applies to the specific service.
The FCA warns that an AR operating beyond the activities allowed by its principal may not give customers the expected FOS or FSCS protection. An AR status is not automatically a problem, but it makes the legal and operational arrangements more important to understand.
Retail CFD and spread-betting protections
CFDs, spread bets and rolling spot FX are leveraged products. For retail customers, FCA rules include:
- leverage limits ranging from 30:1 to 2:1, depending on the underlying asset;
- margin close-out when account equity falls to 50% of the margin required to maintain open positions;
- protection against losing more than the funds in the CFD trading account; and
- a ban on cash and non-cash inducements designed to encourage retail trading.
Firms must also display a standardised warning:
The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
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These protections apply to retail clients and do not apply in the same way to professional clients.
Think carefully before opting up to professional status
A broker may offer professional-client status to customers who meet the relevant eligibility tests. This can provide access to higher leverage, but it can also remove important retail protections, including leverage limits and certain client-loss protections.
Do not treat higher leverage as evidence that a broker is better. It increases the size of the position you can control relative to your deposit and can magnify losses quickly. Be especially cautious if a broker uses sales pressure, suggests that professional status is routine or directs you to an associated offshore company.
How to compare brokers after checking FCA status
Regulation answers the “is this firm permitted to provide this service?” question. It does not answer whether the account represents good value.
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A broker with a low advertised spread may still be expensive once commission, financing and currency charges are included. Compare:
- bid-offer spreads at the times you actually trade;
- dealing commissions;
- overnight or daily financing;
- deposit, withdrawal and inactivity fees;
- foreign-exchange conversion charges;
- market-data or platform fees; and
- share-transfer and corporate-action charges.
For a CFD, calculate the cost of opening and closing the position and holding it overnight. For a share account, check whether a foreign-currency conversion fee applies when buying US or European securities.
Understand how orders are executed
Best execution does not mean that every individual trade will receive the best price available anywhere. It requires a firm to take sufficient steps to obtain the best possible result, taking account of price, costs, speed, likelihood of execution, likelihood of settlement, order size and the nature of the order.
Read the broker’s execution policy and identify whether it acts as agent, principal or both. For OTC CFDs, the broker generally creates and sells the derivative directly to the customer, which gives it influence over spreads, commissions and overnight funding.
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Also investigate:
- where orders are routed;
- how slippage is handled;
- whether orders can be rejected or requoted;
- execution-speed disclosures;
- conflicts of interest;
- whether the broker internalises orders; and
- how prices are generated outside normal market hours.
Check withdrawals and account restrictions
Before depositing money, read the withdrawal terms. Look for minimum withdrawal amounts, verification requirements, processing times, restrictions on returning funds to a different bank account and any conditions attached to bonuses. A regulated broker can still have inconvenient operational terms, so do not discover them only after funding the account.
Claims about FCA brokers that should raise doubt
| Claim | Why it is misleading |
|---|---|
| “Your money is guaranteed because we are FCA regulated.” | Authorisation does not protect against market losses, and FSCS eligibility is conditional. |
| “Our FCA number proves this website is genuine.” | Clone firms can copy a real firm’s name and reference number. |
| “We are on the Register, so we can offer every product.” | Permissions are activity-specific. |
| “FCA registration means crypto is fully protected.” | Cryptoasset registration or financial-promotion compliance is not the same as full investment-product authorisation or FSCS cover. |
| “The best broker offers the highest leverage.” | Higher leverage increases exposure and may require giving up retail protections. |
| “The FCA approves the best brokers.” | The Register records regulatory status; it is not an endorsement or league table. |
A practical due-diligence checklist
Before opening an account, save a copy of the broker’s Register entry and confirm:
- the exact legal entity and FCA reference number;
- current authorisation status;
- permissions for the product you plan to trade;
- whether the firm can hold client money;
- the contracting and custody entities;
- the principal firm, if the broker is an AR;
- FOS availability for the service;
- FSCS eligibility for the specific product and arrangement;
- your proposed retail or professional classification;
- leverage and negative-balance rules for CFDs;
- spreads, commissions, financing and conversion costs;
- execution arrangements and conflicts of interest;
- withdrawal conditions and complaints procedure; and
- any FCA warnings, restrictions or disciplinary history.
Only after these checks should you compare platforms, research tools, customer service and educational features. Those can matter, but they do not compensate for a mismatch between the broker’s permissions and the service you are buying.
FAQ
Is an FCA-regulated broker automatically safe?
No. FCA authorisation reduces some regulatory and fraud risks, but it does not prevent trading losses, insolvency or poor execution. Check the exact legal entity, permissions, client-money arrangements and applicable compensation protections.
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Does FSCS cover losses from share trading or CFDs?
FSCS does not normally cover ordinary market losses, such as a share price falling or a CFD position losing money. Eligible investment claims may qualify for compensation if an authorised firm fails, generally up to £85,000 per eligible person, per firm, subject to the applicable rules.
How can I check a broker’s FCA reference number?
Search the broker on the FCA Firm Checker or the Financial Services Register. Confirm the legal name, current status, permissions and contact details. Do not rely solely on the FCA number displayed on the broker’s website.
Are FCA-regulated CFD brokers allowed to offer unlimited leverage?
Not to retail customers. FCA rules impose leverage limits from 30:1 to 2:1 depending on the underlying asset, together with margin close-out and negative-balance protections. Professional clients may not receive the same protections.
What is the difference between an authorised firm and an appointed representative?
An authorised firm has its own FCA permissions. An appointed representative conducts specified activities for a principal firm, which is responsible for that business. You should check the AR’s permitted activities, contracting entity and whether FOS or FSCS protection applies.
Does FCA regulation mean a broker gives the best prices?
No. Best execution requires the broker to take sufficient steps to obtain the best possible result, considering factors such as price, cost, speed and likelihood of execution. It does not guarantee the best price on every trade.
The Bottom Line
The best FCA-regulated broker is not simply the one with an FCA number, the lowest headline spread or the highest leverage. It is the firm whose exact legal entity is authorised for the service you need, whose website and contact details match the FCA Register, whose client-money and custody arrangements you understand, and whose total costs and execution model suit the way you trade.
Use FCA authorisation as a minimum filter. Then compare value, product risk, execution, withdrawals and the protections attached to your particular account. If a broker cannot clearly explain which company holds your money and which rules apply, do not deposit funds until that uncertainty is resolved.
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