Is FSCS Deposit protection worthless for Forex Brokers? | Forex Factory

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Is FSCS Deposit protection worthless for Forex Brokers?

  • #1
  • First Post: Jul 10, 2018 8:17am Jul 10, 2018 8:17am

I am in the UK and always thought if your Broker went bust you were protected and got your funds back if they are FCA registered. I made an enquiry with them today and was surprised to discover you are not covered at all. I have copied their reply below.



Good Afternoon,


If the funds are invested with no advice to yourself then these would not be protected by the FSCS.


Kind regards

Customer service team

Financial Services Compensation Scheme

[email protected]

  • #2
  • Jul 10, 2018 11:22am Jul 10, 2018 11:22am
I think 'not registered' but 'REGULATED'.
Choose Regulated one



Quoting schoe
I am in the UK and always thought if your Broker went bust you were protected and got your funds back if they are FCA registered. I made an enquiry with them today and was surprised to discover you are not covered at all. I have copied their reply below. Good Afternoon, If the funds are invested with no advice to yourself then these would not be protected by the FSCS. Kind regards Customer service team Financial Services Compensation Scheme [email protected] ("[email protected]")
  • #3
  • Jul 10, 2018 11:28am Jul 10, 2018 11:28am
Its the same for regulated Brokers.
  • #4
  • Jul 10, 2018 11:39am Jul 10, 2018 11:39am
what exactly did you ask them?

Deposit protection relates to event risk so you can't owe more than your deposit and is part of the new EMSA rules FCA have adopted.

Going bust is insolvency risk, protected under FCA authorised businesses to 50k

Pro status removes deposit protection tho
  • #5
  • Jul 10, 2018 11:56am Jul 10, 2018 11:56am
Schoe,

You better tell exactly about your problem. What do you mean 'deposits protection worthless'?

I have one experience when alpari-uk got problem. I have my money back.
  • #6
  • Jul 10, 2018 12:04pm Jul 10, 2018 12:04pm
Quoting triphop
what exactly did you ask them? Deposit protection relates to event risk so you can't owe more than your deposit and is part of the new EMSA rules FCA have adopted. Going bust is insolvency risk, protected under FCA authorised businesses to 50k Pro status removes deposit protection tho
I asked the FSCS if a Broker Regulated and Authorised by the FCA was to go into liquidation would you get your money returned under the Financial Services Compensation Scheme.

The said that the compensation scheme does not cover deposits that you pay into a Broker unless it is a Bank, Building Society or Credit Union.
They said if you invest or trade the money yourself then you would not be covered for Compensation as per my quote on the first post.

Anton I don't have a specific problem I just wanted to highlight the advice I was given to make other traders aware.
  • #7
  • Jul 10, 2018 12:12pm Jul 10, 2018 12:12pm
at that time, I have my money back (as an individual trader). This facility cover when something happenned with the regulated broker.
Would you please share your conversation with FSCS?
Regards,
Note: This protection makes UK a favourite country to trading

Quoting schoe
{quote} I asked the FSCS if a Broker Regulated and Authorised by the FCA was to go into liquidation would you get your money returned under the Financial Services Compensation Scheme. The said that the compensation scheme does not cover deposits that you pay into a Broker unless it is a Bank, Building Society or Credit Union. They said if you invest or trade the money yourself then you would not be covered for Compensation as per my quote on the first post. Anton I don't have a specific problem I just wanted to highlight the advice I was given to...
  • #8
  • Jul 10, 2018 12:24pm Jul 10, 2018 12:24pm
Quoting schoe
{quote} I asked the FSCS if a Broker Regulated and Authorised by the FCA was to go into liquidation would you get your money returned under the Financial Services Compensation Scheme. The said that the compensation scheme does not cover deposits that you pay into a Broker unless it is a Bank, Building Society or Credit Union. They said if you invest or trade the money yourself then you would not be covered for Compensation as per my quote on the first post. Anton I don't have a specific problem I just wanted to highlight the advice I was given to...
Ask them if there's been a change of policy, because every single broker registered in the UK is clearly covered up to £50k by FSCS. Tell them this is very serious, and you want to escalate it, or ask them for a quote for the press. Sure they'll do a bit more checking.
  • #9
  • Jul 10, 2018 12:38pm Jul 10, 2018 12:38pm
This is the full email conversation I had with the FSCA.

Message: Hello.

I am looking to make a deposit with Cresco Capital Markets their registered number with teh FCA is 764353.My question is would me account be protected if they go into liquidation and how long would it take for my money to be returned.

Good Morning,

Thank you for your enquiry. In terms of a deposit, protection would depend on whether this was simply depositing the funds or whether this was being invested in shares or any other policy. If it was being invested the protection would vary based on any advice given.

Timescales for receiving any compensation would also vary on a claim to claim basis depending on complexity and information given.

Kind regards
Customer service team
Financial Services Compensation Scheme
[email protected]

Thankyou for the prompt reply, I would be depositing money then making my own trading decisions to trade spot foreign exchange
Is this covered ?

Good Morning Mark
The FSCS recognises a deposit as funds which are held in an account not funds entered into a scheme to be invested.
If the funds are being entered into a scheme for the purpose of invested, this would be covered if there had been advice given in terms of trading and this advice was later noted to put any individual in a financially worse position.
Kind regards
Customer service team
Financial Services Compensation Scheme
[email protected]

Morning,
Sorry I don't understand the firm is a Broker who just allow you to trade, the decisions on what investments to take with the money are made by me. I just want to know if my funds are safe if they unfortunately go into liquidation
Thanks


Good Afternoon,
If the funds are invested with no advice to yourself then these would not be protected by the FSCS.
Kind regards
Customer service team
Financial Services Compensation Scheme
[email protected]

Wow , really? So what is the point of foreign exchange brokers who take large deposits from clients advertising that they are FCS registered so your funds are safe if they go into liquidation?

Regards


Good Afternoon,
For deposits, the funds would need to be deposited into a bank/building society/credit union.
If the funds are being used as investments and there is no advice given to an individual there would be no protection as they are investing based on their own choosing and are receiving no bad advice or guidance on the investment.
Kind regards
Customer service team
Financial Services Compensation Scheme
[email protected]
  • #10
  • Jul 10, 2018 1:12pm Jul 10, 2018 1:12pm
It seems to me that the person you are communicating with does not even understand what a broker is
  • #11
  • Jul 11, 2018 2:55pm Jul 11, 2018 2:55pm
schoe,

you ask again, hopefully other person will answer you.

Regards,
  • #12
  • Jul 15, 2018 5:09am Jul 15, 2018 5:09am
I am reading that the FSCS compensation scheme now covers up to £85k. Applicable only to funds deposited, not gains generated through trading, whether from closed historic trades or open trade positions. So if you deposited £10k and built up your account to £30k with successful trades, you'd still only be entitled to £10k back.

If you're in the UK, don't even consider giving money to a non-FCA regulated firm in the financial sector.
  • #13
  • Jul 15, 2018 5:12am Jul 15, 2018 5:12am
Quoting tomorton
I am reading that the FSCS compensation scheme now covers up to £85k. Applicable only to funds deposited, not gains generated through trading, whether from closed historic trades or open trade positions. So if you deposited £10k and built up your account to £30k with successful trades, you'd still only be entitled to £10k back. If you're in the UK, don't even consider giving money to a non-FCA regulated firm in the financial sector.
Tom,

Thanks for the info. Any link to the info you just shared? Much appreciated...
  • #14
  • Jul 15, 2018 5:19am Jul 15, 2018 5:19am
To go right to the source, go to www.fscs.org.uk and www.fca.org.uk, but this information is paraphrased by numerous creditable sources across the internet but also importantly in the T&C of the FCA-regulated firm that I use.
  • #15
  • Sep 26, 2018 6:55pm Sep 26, 2018 6:55pm
Quoting tomorton
I am reading that the FSCS compensation scheme now covers up to £85k. Applicable only to funds deposited, not gains generated through trading, whether from closed historic trades or open trade positions. So if you deposited £10k and built up your account to £30k with successful trades, you'd still only be entitled to £10k back. If you're in the UK, don't even consider giving money to a non-FCA regulated firm in the financial sector.
Does anyone have any new (confirmed) info about all this?

To my best knowledge, in case of EVERY SINGLE fca regulated broker (must be regulated not registered), in case of broker insolvency funds are protected up to GBP50k. If a financial institution (where a broker keeps client funds) goes bust, then client funds are protected up to GBP85k.

Unless every FCA broker is lying, 50k deposit protection should be correct, as all websites state this. Now, if this is not applicable to gains but only to originaly deposited funds, than this is a serious issue. If anyone has any confirmed info about all this pls do share.
  • #16
  • Last Post: Oct 18, 2019 10:57am Oct 18, 2019 10:57am
Quoting schoe
This is the full email conversation I had with the FSCA. Message: Hello. I am looking to make a deposit with Cresco Capital Markets their registered number with teh FCA is 764353.My question is would me account be protected if they go into liquidation and how long would it take for my money to be returned. Good Morning, Thank you for your enquiry. In terms of a deposit, protection would depend on whether this was simply depositing the funds or whether this was being invested in shares or any other policy. If it was being invested the protection...
Quick question : you a member of crescocap ? like did you end up depositing with them?
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