United Kingdom has one of the best regulatory system to prevent financial malpractices and scams that affect retail traders and institutional traders. The Financial Conduct Authority (FCA) is one of the highly reputed regulatory organisations in the world which regulates Forex broker and financial institutions.
Financial companies are regulated by FCA in conjunction with Bank of England and the Prudential Regulatory Authority. Since FCS is part of the European Economic Area Agreement, Forex brokers regulated by the FCA are able to operate in any part of the European Union without the need to set up offices in Europe.
Protection Of Client Funds
FCA brokers have to keep client funds in segregated accounts away from their company accounts, and should not use their traders’ money for any other purposes.
FCA regulated broker should have a minimum operating capital of £1 million, which increases according to the number of traders and the trading capital.
FCA regulated brokers must ensure that all withdrawals are processed immediately without any delay.
Financial Services Compensation Scheme
FCA regulated FX brokers are required to protect their clients under the FSCS (Financial Services Compensation Scheme). This provides assurance to the traders that their trading capital is protected in case of any the broker faces bankruptcy or insolvency.
- The Financial Services Compensation Scheme (FSCS) provides protection for traders against broker-related issues by providing a guarantee of up to £50,000 in compensation.
- In the case of broker liquidation, traders can receive a 100% of their capital up to £30,000 and a maximum of 90% for the remaining amount for a maximum of £50,000.
Proactively Tackling Financial Abuse
FCA regulated brokers are required to submit yearly audit reports and periodic financial statements of their holdings.
FCA actively seeks out financial scams to deter companies from committing any offense.
FCA investigates any instances of fraud or consumer abuse, even though it does not get involved in any conflict between a company and its client.
Forex brokers found guilty of malpractice could be revoked of their licenses or issued fines or permanently banned from operating in the UK.
FCA also has strict rules regarding price manipulation, platform tampering, and conflicts of interests with its clients.
The online FCA database can be used to verify the FCA regulatory information advertised by the broker.
You can click here to access a list of known scammer and fake regulatory names used by fraudulent companies.