What Does FCA Authorisation Actually Protect? A Plain Explanation of the Small Print 

‘FCA regulated’ is on every trading advert in Britain. Very few people could say what it means, and the gaps matter. 

You will not open a UK trading account without seeing the phrase FCA regulated, usually near a logo, usually in a reassuring typeface. It genuinely matters. It also protects considerably less than most people assume, and the gaps are exactly where retail investors get hurt. 

Here is what it does and does not cover. 

What does authorisation actually mean? 

That the firm has satisfied the Financial Conduct Authority on capital adequacy, systems, senior management competence and conduct rules, and continues to report to it. It is a meaningful bar. Firms fail to clear it and firms lose it. 

What happens to your money if the firm collapses? 

This is the part worth understanding properly. Authorised firms must keep client money segregated from company money, and the Financial Services Compensation Scheme covers eligible claims up to £85,000 per person per firm if the firm fails and cannot return your assets. 

Two important limits. It is per firm, not per account – three accounts with one provider share one £85,000 limit. And it covers the firm failing, not your investments falling in value. 

What is definitively not covered? 

The scheme protects against firm failure, not against loss. The distinction catches people out constantly. 

What is the difference between authorised and registered? 

A distinction that catches people out regularly, particularly with crypto. Authorised means the firm can carry out regulated activities and the full protections apply. Registered, in some contexts, means the firm has satisfied a narrower set of requirements – anti-money-laundering supervision, for instance – without its products being regulated at all. 

A crypto firm registered with the FCA for money-laundering purposes is not the same as an authorised investment firm, and the FSCS protections do not follow. Marketing material occasionally blurs the two, sometimes carelessly and sometimes not. 

How do you check a firm is genuinely authorised? 

Search the FCA register by firm name, then match the firm reference number shown on the website against the register entry. Both steps matter, because clone firms copy a genuine reference number and substitute their own contact details – so a real number on a fake site is a known pattern rather than a rarity. Also check the contact details on the register against the ones on the site. If they differ, stop. 

How old is the check you are reading? 

One honest limit applies to this check and to every review that runs it for you. A register lookup is a photograph. Permissions get varied, firms get acquired, and a permission set that was accurate on the day somebody tested a platform can be narrower by the time you read about it. A review that names the date it looked is doing you a favour. A review that does not is asking you to trust a snapshot with no timestamp on it, which is why the thirty seconds are worth spending again on the day you deposit. 

What about the loss disclosures? 

A separate obligation, and a useful one provided you use it for the job it can do. Providers of leveraged products must publish the percentage of their retail clients who lose money over a set period. Read it to calibrate: no firm on the register has most of its clients finishing ahead, and seeing that in the provider’s own words is worth more than any amount of marketing copy about opportunity. 

What the figure cannot do is separate two providers. It is shaped by who the firm attracts, what they trade and how much leverage they take, so a lower number can describe a more cautious client base rather than a better platform. It calibrates a product category. It does not rank the firms inside it, and anyone using it as a league table has misread what is being measured. 

Where does regulation sit with automated trading tools? 

Usually not with the tool. A trading bot or signal service is typically unregulated software; the authorisation sits with the broker where the trades execute, so the protections above attach to the venue rather than to the algorithm. That has a practical consequence for anyone evaluating one. A serious test of AI trading tools means opening an account at the broker underneath them, which is the part a software review usually skips. The marketing lives in the software layer and the regulated layer sits beneath it. 

What happens in practice when a firm does fail? 

Slower and messier than the headline suggests, though it generally works. An administrator is appointed, client assets are identified and reconciled, and eligible claims are paid – but the process routinely takes months and sometimes considerably longer, particularly if the firm’s record-keeping was poor. 

There is also a practical wrinkle worth knowing: administration costs can be taken from client money in some circumstances, so recovery is not always penny-for-penny even below the £85,000 threshold. The scheme is a genuine backstop rather than an insurance policy that makes failure invisible. 

Which is an argument for not holding everything with one provider, and a stronger argument for checking the register before you deposit rather than afterwards. 

So how much comfort should the FCA logo give you? 

A reasonable amount, correctly framed. It means the firm is supervised, your money should be segregated, and there is a compensation route if the business fails. It says nothing whatsoever about whether the product is suitable, well-priced or likely to make you money. 

Treat it as a minimum requirement rather than a recommendation. Unauthorised is a dealbreaker; authorised is the start of the assessment, not the end of it.