What happens to my money if a UK broker goes bust? (LV)

What happens to my money if a UK broker goes bust?

What happens to my money if a UK broker goes bust? Segregated client money is returned first; if there is a shortfall, the FSCS may cover up to £85,000.

Īsumā

If an FCA-authorised broker goes bust, your money should not vanish with it. Client money is held in segregated accounts, apart from the firm's own funds, and is returned to clients through the insolvency process. If there is a shortfall, eligible clients may claim from the FSCS, up to £85,000 per person, per firm. Pepperstone is our first pick here: its UK entity holds client money in segregated accounts and states that eligible clients may be covered by the FSCS. At Best Trading Signal (BestTradingSignal.com), Capital.com is our second choice and XS our third.

Segregation first: an FCA broker keeps client money apart from its own funds
FSCS for shortfalls: up to £85,000 per eligible person, per firm
Not for trading losses: the FSCS does not pay for poor investment performance
Pepperstone UK: segregated accounts and an FSCS statement on its own site
Delays are normal: an insolvency can take time before money is returned
Still high risk: the FSCS does not cover losses, and 73.6% of Pepperstone's FCA retail accounts lose money on spread bets and CFDs

What happens, step by step, when a UK broker fails?

An insolvency practitioner takes control of the firm. Open positions are normally closed, client money held in segregated accounts is identified, and it is returned to clients rather than paid to the firm's creditors. If the segregated money falls short of what clients are owed, eligible clients can claim the gap from the Financial Services Compensation Scheme (FSCS), up to its limit.

That is why the first thing to check about any broker is the legal entity and its regulator. If you want an FCA-authorised broker that states its segregation and FSCS position clearly, you can open a Pepperstone account with its UK entity, Pepperstone Limited.

How a UK broker failure usually unfolds

How a UK broker failure usually unfolds
Stage	What happens	What it means for you
1. Appointment	An insolvency practitioner takes over	Trading usually stops
2. Positions closed	Open trades are closed out	Your balance is fixed at that point
3. Client money identified	Segregated accounts are reconciled	This money is for clients, not creditors
4. Distribution	Client money is returned	It can take time
5. Shortfall claim	Eligible clients claim from the FSCS	Up to £85,000 per person, per firm

What happens to my money if a broker goes bust?

It depends almost entirely on where the broker is regulated. Outside the UK, protections are set by the local regulator, and compensation schemes, where they exist, have their own rules and limits. An unregulated firm may offer no protection at all.

This is why the entity in your client agreement matters more than the brand. Pepperstone, for example, has seven regulated entities. A UK resident signs with Pepperstone Limited under the FCA, and the protections on this page apply to that company. XS is not FCA-authorised; it is regulated in Seychelles, Cyprus, South Africa and Mauritius, so a UK client there would rely on those regulators' rules instead.

Are client funds protected by FSCS at UK brokers?

Often, yes, but only for a shortfall after the firm fails, and only for eligible clients. The current FSCS limit for investment claims is up to £85,000 per eligible person, per firm, according to the FSCS. The FSCS will not pay claims for poor investment performance, so it never covers trading losses.

Pepperstone's UK site states that eligible clients may be covered by the FSCS for losses up to £85,000 if funds cannot be fully returned after a liquidation. For any other broker, check its UK site and the FSCS website before you deposit, rather than assuming.

Which brokers hold client money in segregated accounts?

Every FCA-authorised broker must segregate retail client money. Among the brokers we rank, both UK entities say so on their own sites. Pepperstone states that client money is held in segregated bank accounts with top-tier banks, separate from its own capital. Capital.com's UK site states that client funds are held in segregated accounts at regulated banks.

What each broker's UK entity states

What each broker's UK entity states
Broker	UK regulator	Segregated client money	FSCS statement
Pepperstone	FCA, FRN 684312	Yes, with top-tier banks	Eligible clients may be covered up to £85,000
Capital.com	FCA, 793714	Yes, at regulated banks	Not stated on the page we checked; confirm with Capital.com
XS	Not FCA-authorised	Check XS's own documents	Not applicable as a UK firm

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What protections do FCA regulated brokers offer UK clients?

FCA authorisation gives a UK retail client a set of protections that work together. None of them protects you from the market.

Main protections for UK retail clients

Main protections for UK retail clients
Protection	What it does
Segregated client money	Keeps your money apart from the broker's own funds
FSCS	May cover a shortfall after failure, up to £85,000 per eligible person, per firm
Negative-balance protection	You cannot lose more than the money in your account
Leverage caps	1:30 on major currency pairs, lower on other markets
Loss-rate disclosure	The broker must show what share of retail accounts lose money
Complaints route	Unresolved complaints can go to the Financial Ombudsman Service

What is not protected?

Trading losses are not protected, ever. Neither is any amount above the FSCS limit, nor money held with a non-UK entity of the same group. If a broker fails while you hold an open trade, the position will usually be closed at that time, and you cannot choose a better moment.

If you hold large sums for trading, consider whether all of it needs to sit with one broker. Our guide to negative balance protection explains the separate question of losing more than your deposit.

Does using Best Trading Signal change any of this?

No. Best Trading Signal never holds your money. Your funds stay with the broker you choose, under its regulator. Each of our alerts gives an entry, a take-profit and a stop-loss that you place yourself. A Pepperstone client takes our alerts through the paid subscription on our Telegram bot.

Our free signals need an XS account instead: you open it through our link and deposit $400, which stays your own trading capital, held by XS under its regulators rather than the FCA. Results are on the performance page. Past results do not guarantee future results, and no signal is certain to win.

Checklist: is my money protected at this broker?

If you choose Pepperstone's UK entity, open your Pepperstone account here.

Disclosure: we may earn a commission from Pepperstone, Capital.com and XS if you open an account through our links. That does not change what we publish about them. This page is general education, not personal investment or legal advice.

Risk warning (Pepperstone): 73.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider under the FCA, 74.1% under CySEC, 76.1% under BaFin, 80% under the SCB and 88% under the CMA (Kenya). The figure depends on the entity your account is opened with. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Find the entity: read the full company name in your client agreement.
Search the FCA register: for Pepperstone Limited, the number is 684312.
Read the client money page: look for segregated accounts at named or regulated banks.
Check FSCS eligibility: on the broker's UK site and on the FSCS website.
Mind the limit: the FSCS covers up to £85,000 per eligible person, per firm.

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Biežāk uzdotie jautājumi

Your segregated client money is identified and returned to clients through the insolvency process, not paid to the firm's creditors. If there is a shortfall, eligible clients may claim from the FSCS, up to £85,000 per person, per firm. The process can take time, and open trades are usually closed.

No. The FSCS does not pay claims for poor investment performance, so losses from your own trades are never covered. It may help only when a failed firm cannot return the client money it held for you, and then only for eligible clients up to £85,000 per person, per firm.

Pepperstone Limited is FCA-authorised (FRN 684312). Its UK site states that client money is held in segregated bank accounts with top-tier banks and that eligible clients may be covered by the FSCS up to £85,000 if funds cannot be fully returned. Trading losses are not protected.

For protection if the broker fails, usually yes, because FCA rules on segregation and the FSCS apply only to UK-authorised firms. An offshore entity follows its own regulator's rules, which may give less. Read the entity name in your client agreement to know which rules apply to you.

There is no fixed time. The insolvency practitioner must first reconcile the client money and agree each client's balance, which can take months in a complex case. An FSCS claim, if needed, comes after that. Keep your own records of balances and trades to speed up any claim.

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