When choosing a broker, it is essential to know how your money is protected and how much compensation you are eligible to
claim, should the firm go bankrupt. Let’s break it down.
Brokers who have the permission by the Financial Conduct Authority (FCA) to hold and control client money are required to do so in segregated accounts. This means, that if a broker defaults, client funds in theory remain unaffected.
If a broker defaults and there is a shortfall in client assets, meaning funds that were supposed to be kept in segregated accounts turn out not to be, traders are protected by the Financial Services Compensation Scheme (FSCS).
The FSCS covers up to £85,000 per trader, but not per account. If a trader is owed more than £85,000 by an insolvent broker, it is unlikely that their funds will be recovered.
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