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Choosing a broker involves managing counterparty risk — the likelihood that the firm remains solvent and handles your money correctly. In the UK, nearly all financial service activities must be authorised by the Financial Conduct Authority, and you can search the FCA Register for firms and the activities they have permissions for. Before opening an account, retail investors should follow a straightforward verification process.
Using an authorised firm, with the correct permissions, will greatly reduce the risk of harm. The first step is to verify the broker's actual regulatory status directly. Always check that permissions and activities of the firm match the service it's providing to you. Visit the FCA Register and search by the broker's legal entity name or its Firm Reference Number (FRN). Do not rely on logos, screenshots, or marketing claims — check the official register only.
Once you find the firm on the register, verify that its FCA permissions explicitly cover the services you plan to use. A firm authorised for investment advice may not be authorised for execution. Match the listed permissions (e.g., "dealing in investments as principal," "arranging investment business") to the specific activities the platform offers.
The investment-related FSCS framework falls under separate FCA rules, and the protection limit for investment accounts stays at £85,000 per person per firm. This is a critical distinction: brokerage or investment accounts remain capped at £85,000, even though the deposit protection limit for cash deposits will rise from £85,000 to £120,000 per eligible depositor as of December 2025. Compensation applies only in cases such as firm insolvency, fraud or mismanagement — and does not cover losses caused by market fluctuations. Know exactly what your investments are covered for and what they are not.
Scammers often use legitimate-sounding names or clone websites. The legal entity registered with the FCA may differ from the brand name advertised. Verify that the company name, registered address, and website domain all match the FCA Register entry. Many scammers pretend to be a legitimate firm.
The FCA maintains a warning list of unauthorised firms and cloned websites. Cross-check the broker's name against these warnings. If a broker cannot be found on the register or appears on a warning list, do not deposit funds.
Regulatory authorisation is binary: either a firm is authorised or it is not. There is no "quasi-regulated" middle ground. The Financial Services Compensation Scheme (FSCS) is the UK's statutory compensation scheme — if a financial provider fails, the FSCS steps in to pay back eligible money up to set limits, and protection is free and automatic as soon as you open an account with an FCA-authorised firm. But FSCS protection only applies if the firm was genuinely authorised at the time it failed and the loss falls within its scope.
Taking five minutes to verify a broker's authorisation is the most effective due diligence step any UK investor can perform. It costs nothing, requires no special knowledge, and uses only public information.
Analysis, not investment advice.
