Are FCA Regulated Brokers Safe? Is Your Money Secured?

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The Financial Conduct Authority (FCA) is one of the most reliable regulatory agencies globally. FCA license sets the standards for a broker in terms of legality, transparency, and credibility.

The organization was established by the government of the United Kingdom, after a series of changes in the financial regulatory structure in the UK. It has managed to bring the financial marketplace to its best forms, ensuring the highest safety and security standards.

The FCA’s main duty is to observe the way the financial institutions operate in the market and make sure all the regulations are being carefully followed, in order to promote fair competition among Forex brokers.

It also works for the welfare of the traders, since every Forex broker regulated by the FCA is strictly following measures to ensure the safety of the funds deposited by the traders.

Best FCA Forex Brokers

How Was The FCA License Created?

After the banking crisis of 2008, the government in the United Kingdom has created the FCA as a successor to the FSA (Financial Service Authority). The main aim of this was to observe the conduct of financial institutions and to impose sufficient penalties for any misbehavior detected.

The foundation of the FCA regulatory authority has elevated the financial market in the UK, abolishing substantial instances of fraud, financial crimes, and money laundering.

This establishment has gained the eyes of many financial investors and brokers around the world, because not only the regulations were strict against financial scams, but they were also consistent and in favor of the trader’s security as well.

Many brokers now seek the UK license to certify their eligibility and to penetrate to as many markets as possible, since the adherence to such a framework refers to a high standard behavior.

Is FCA License Reliable?

Despite the criticism that the Financial Conduct Authority has faced in the beginning, originating from the fact that it took little to no accountability when it comes to limiting the loss of money by traders, it has recently become one of the most reputable regulatory agencies.

The FCA acts as a world-class standard that is sought by every Forex broker in the world. Any FCA-regulated Forex broker is considered to be of very high quality and safety, which is very important for traders.


Benefits Of FCA For a Broker

In order to obtain an FCA license issued by the regulatory authority in the UK, a broker needs to follow a rigidly structured framework and it is only granted the license after a proven activity of good conduct that ranges between 6 to 12 months.

Holding an FCA license is a tie-breaker when a trader is choosing between FX brokers, and a regulated broker by FCA can get an advantage over other brokers who offer cheaper services or require lower deposit minimums or fees.

Unlike the NFA license of the United States, brokers are not required to hold an FCA license to offer their services to clients in the United Kingdom, nor are they required to be geographically located in the UK.

Any Forex broker can be located anywhere else in Europe and offer services to UK citizens using any valid European license. However, this is subject to change due to Brexit.

Benefits Of FCA For a Trader

FCA license could be a higher advantage for the traders, the FCA was established to promote transparency and ensure the security of funds for the traders since they are the deciding factor for the reputation of the broker.

Every broker operating under the FCA license is required to have an operating capital of at least GBP 1 million in order to start operations, which is a great safety measurement for traders.

This amount works like a financial cushion that ensures the trader that the broker can tolerate any unexpected financial market fluctuations, without the risk of going bankrupt.

In addition, FCA incorporates the FSCS (Financial Services Compensation Scheme) which ensures the traders a monetary backup if the broker files for insolvency, due to unwanted market movement.

If the broker defaults, the compensation scheme guarantees the trader to get their money back up to GBP 50,000, which is only payable if the broker cannot pay back even after the liquidation of its assets.

How Does The FCA Work?

It is a self-regulatory organization that works independently and raises its financial abilities from the membership fees paid by every broker willing to obtain the FCA license.

Its cooperation with the European Economic Area could be the best feature, meaning that it allows FCA brokers to operate in other European countries under the EEA agreement.

Likewise, any broker with any other valid license in Europe can carry out financial brokerage services in the UK, without the need to hold an FCA license.

Segregation Of Accounts

FCA regulations require all the brokers to segregate their traders’ accounts, which means that once a trader opens a trading account with the broker, that account is opened separately from the broker’s main capital account.

This segregation of accounts keeps the traders’ money far from the broker’s money, and safe in the case of insolvency, or freezing the activity of the broker’s bank account.

bank transfer

FSCS Compensation

(icon of shield representing that the traders are protected under the FCA)

FCA regulator observes the compliance of all the brokers with the guidelines introduced and imposes hefty penalties in the case of any breach, making it one of the most trustworthy financial activity licenses.

Every broker under the FCA license shall provide the FSCS protection for every trader equally, which minimizes the capital loss of traders, resulting from the non-trading activity.

Complaints Handling

The FCA pays huge attention to resolving complaints issued by traders, and it encourages all the brokers working under its license to work on solving the complaints swiftly and efficiently.

In addition to that, if both parties refuse to reach a common ground in a dispute, the FCA has set a financial ombudsman that can be referred to for despite resolution, to make final arbitration decisions.

complaints handling

How To Find An FCA Reliable Broker?

All the brokers working under the FCA license are assigned a license registration number, which is recorded in the database of the regulatory system, therefore, any trader can look up the license number in the database of the FCA, and if found, it is a legit broker.

The license registration number can be found on the broker’s website, usually, brokers place that on the main page, as an advertisement to the standards they follow.

Alternatively, this can also be found in the legal documentation that shall be prominently published by the broker on the website, and the number includes the registry number and the legal business name.

The database of the UK regulatory authority does also store the registration information of brokers working under the umbrella of the EEA, so traders can also lookup reliable brokers that are recognized by the FCA, whether located inside or outside the UK.

FAQ About FCA Forex Brokers

What Does It Mean To Be Registered With The FCA?

FCA is one of the most popular forms of licensing for financial brokerage services. All brokers with an FCA license undergo a strict guideline of rules and regulations, and any violation can result in hefty fines imposed on the broker.

What Is The Minimum Deposit To Trade With FCA-Regulated Brokers?

There are no limits on the minimum amounts deposited for the trading account. Therefore, a trader may start trading with a $1 deposit, which is still preferred by many traders, especially the beginners, who are not ready yet to risk a significant amount of money.

What Is The Maximum Leverage Offered By An FCA Broker?

Anything between 1:2 and 1:30. The leverage cap is imposed in an attempt to limit the loss of a trader when opening a position in the market since the leverage can expose the trader to higher-value trades.

Is Day Trading Allowed Under The FCA Regulations?

Yes. FCA does not impose any limitation on day trading, therefore, a trader may open a market position as the trading session opens, and then close it by the end of the trading day.

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