UK forex brokers work under rules that do not apply in most other markets. Retail leverage is capped at 30:1 on major currency pairs. Losses cannot run past the account balance. Client money sits in segregated bank accounts, and up to £85,000 is protected if the firm collapses. Before funding any account, the first step is looking up the firm’s reference number on the FCA register, which takes about a minute.
Those protections are the reason the UK market looks different from almost everywhere else. They are also the reason UK traders often assume every authorised broker is much the same. On paper, close to it. In practice, less so.
The pricing figures further down come from CompareForexBrokers, which recorded spreads on live UK accounts at the FCA-regulated brokers it scores during July 2026.
What FCA authorisation actually covers
The Financial Conduct Authority regulates firms, not products. A broker offering CFDs or spread bets to UK retail clients needs permission to deal in investments as principal, and that permission comes with conditions attached.
Every authorised firm holds a Firm Reference Number. The number appears on the Financial Services Register alongside the permissions the firm actually holds, its trading names, and its registered address.
That last detail matters more than it sounds. Firms often operate several brands under one authorisation, and clone scams copy the details of genuine firms almost exactly. Checking the FRN against the register, then calling the number listed on the register rather than the number on the website, is the standard check the FCA itself recommends.
Two consequences follow from the brand point. A single FCA licence can carry more than one consumer-facing name, so two brokers that look like competitors are sometimes the same legal entity with the same balance sheet behind them. An authorised firm can also hold permissions that exclude retail clients entirely, which is why the permission wording matters as much as the presence of a number.
Authorisation is not a quality rating either. It confirms the firm has met capital and conduct requirements. It says nothing about spreads, execution speed, or whether the platform stays up during a payrolls release.
The leverage caps
Permanent limits came into force on 1 August 2019 under policy statement PS19/18, replacing the temporary measures ESMA had introduced across the EU in August 2018.
Leverage for retail clients runs between 30:1 and 2:1 depending on the volatility of the underlying asset. Major currency pairs sit at the top of that range at 30:1. Non-major pairs, gold and major indices are capped at 20:1, other commodities and non-major indices at 10:1, and individual shares at 5:1.
A trader with £1,000 can therefore control £30,000 of EUR/USD exposure. Before the rules, the same £1,000 at 500:1 would have controlled £500,000, and a 0.2% move against the position would have wiped the account.
Alongside the caps sits the margin close-out rule. Once account funds fall to 50% of the margin needed to maintain open positions, the firm has to start closing them. The rule is applied at account level rather than per position, which is why it doubles the effective margin requirement: a 30:1 cap behaves closer to 15:1 once the close-out threshold is counted.
The FCA also banned monetary and non-monetary inducements to trade, and required every firm to display the percentage of its own retail accounts that lose money. That percentage sits on every authorised broker’s homepage, and it is worth reading before the marketing above it.
Negative balance protection
Retail accounts cannot go below zero. If a market gaps through a stop and the resulting loss exceeds the account balance, the broker absorbs the difference.
This came directly out of January 2015, when the Swiss National Bank abandoned the franc’s euro peg and EUR/CHF fell roughly 30% in minutes. Retail traders across Europe finished that morning owing their brokers money they did not have. Alpari UK entered insolvency within days.
The protection attaches to the account rather than to the strategy. A retail account running an automated system sits under the same 30:1 cap and the same downside floor as one traded by hand, and the algorithm gets no additional leeway for trading more often.
Professional clients do not receive negative balance protection by default. That is one of several reasons the professional categorisation is worth less than it appears to most people who apply for it.
How client money is held
Under the FCA’s client asset rules, client money is held in segregated accounts at approved banks, separate from the firm’s own working capital. The broker cannot use it to fund its own operations.
Segregation is about ownership, not performance. It does not protect against losing trades. It means that if the firm enters administration, client money forms a pool belonging to clients rather than to the firm’s general creditors.
Reconciliation is required daily, and failures in this area have produced some of the larger enforcement fines the FCA has issued.
What the FSCS covers
The Financial Services Compensation Scheme covers up to £85,000 per person per firm for protected investment business.
The trigger is firm failure. A trader whose broker collapses with £60,000 in a segregated account, and a shortfall in that account, has a claim. A trader who loses £60,000 on GBP/JPY has none. The scheme exists for insolvency, not for bad trades.
Two conditions catch people out. The £85,000 limit applies per firm rather than per account, so holding three accounts with one broker does not multiply the cover. And because a single licence can carry several brands, two accounts that feel like diversification can sit under one firm and one limit.
Checking a broker before depositing
The process takes a few minutes.
Firstly, find the firm on the Financial Services Register and note the FRN. Secondly, confirm the trading name on the website matches a trading name listed on that register entry. Thirdly, check the permissions cover retail clients, because some authorised firms deal only with professional clients and eligible counterparties. Finally, read the loss percentage in the risk warning, which every authorised firm has published since August 2019.
Traders weighing up derivative structures alongside this will find the differences between spread betting and CFD trading relevant, since the two are taxed differently in the UK while both sit under the same authorisation. Spread betting profits fall outside capital gains tax, though losses cannot be offset either. CFD profits are taxable and losses are declarable.
A wider view of who regulates what, in the UK and elsewhere, is set out in the regulatory organizations reference.
Where FCA brokers still differ
Everything above is common to every authorised firm. Leverage caps, negative balance protection, segregation and FSCS cover are floor requirements, not selling points, however often they appear in advertising.
The differences sit in the parts the rulebook leaves open, and pricing is the largest of them. Nothing in PS19/18 governs what a spread may be.
CompareForexBrokers recorded spreads across 41 account configurations in July 2026, on live UK accounts opened at each broker’s FCA-authorised entity and funded in sterling. Readings were taken at 09:00, 12:00 and 16:00 London time across three consecutive trading days, and the modal value published alongside the test date and the account type.
The spread of results was wide. On GBP/USD, standard accounts averaged 1.48 pips against 0.44 pips on raw accounts, a gap of more than three times on the same pair under the same regulator.
Commission closes some of that gap, and the pricing pages do not do the arithmetic. One pip on a standard EUR/USD lot is worth about £7.43. Commissions across the tested raw accounts ran from £1.00 to £2.61 per side, so a £2.00 per side account charges £4.00 round turn, or roughly 0.54 pips before any spread is counted. Add that to the 0.44 raw average and the raw account costs about 0.98 pips against 1.48 on standard. Cheaper, by around half a pip rather than the full pip the headline figures imply.
The advertised numbers moved in one direction. Among the brokers quoting a single spread-only account, where the advertised figure and the recorded figure measure the same thing, every one recorded wider live than it advertised. The gaps ran from 0.12 to 0.70 pips. Not one recorded tighter.
“Every broker we cover holds an FCA authorisation, so the licence stops being the thing that separates them,” says Justin Grossbard, co-founder of CompareForexBrokers. “What separates them is the spread you actually pay at the moment you click, and that is not in the rulebook. So we open the accounts, fund them in sterling and record it.”
For UK traders the practical order runs one way. Confirm the FCA authorisation first, because it is the condition that makes everything else worth assessing. Then compare on the things authorisation does not standardise, and add the commission back in before deciding anything.
