How can you verify the legitimacy of the FCA UK Forex brokers’ license and avoid getting scammed? In this article, I will cover how to check the UK FCA register and verify whether a company is regulated and what permissions it has.
May 27 2020 | AtoZ Markets – In a world of constantly evolving regulations, licensing and compliance is of paramount importance. Many traders and brokers read and hear about regulation everywhere, but even with all of this awareness, I still often times come across corporate clients and institutional traders who are failing to conduct counterparty due diligence.
In this article, I will cover why you should trade with an FCA Forex regulated broker. I’ll also discuss how to check the UK FCA register and verify whether a company is regulated and what permissions it has. Please note that license verification is only one item in a list of due diligence checks that you need to conduct when selecting a counterparty.
Why you should trade with an FCA regulated broker
It is compulsory for companies in the UK whether a business, asset manager, broker, or financial investment firm the activity to be registered and regulated by the FCA.
First of all, the FCA set a range of registration requirements before the broker is allowed to operate in the market, which includes raising of fees with a high initial capital to apply for the FCA license and carry out its regulated activities further.
The license type based on factors such as a scale of activities and divided into STP license, which imposes EUR 125,000 initial capital and EUR 730,000 for Market Making license.
Furthermore, upon application, the company will be checked for its adequacy to operate in the market, with a review of business plans, budgets, resources, applied systems, and controls. The directors and key staff will be interviewed and obliged to have the necessary qualifications with an effective background, so the requirements are met and the director experienced enough to run the brokerage.
Additionally, the broker should maintain a physical office in the UK and organized to comply with the FCA rules and mandates at all times. FCA Brokers operate their business based on the FCA handbook guidelines to ensure clients are being treated fairly, the information provided accurately and most important, transparently.
In addition, the FCA is able to ban financial product, firm, or the particular asset manager, as well as have the power to instruct firms to immediate action, modification, or revoke if necessary.
Related: FCA revokes permission to broker
How to verify if a forex broker is licensed by the FCA
Are you in doubt whether your chosen fx broker is among FCA UK regulated forex brokers or not?
Here is the way to check it easily:
- First of all, head to their website: https://www.fca.org.uk/
- Type your brokerage name into “SEARCH by company, person product” field
- In case you cannot find anything, check broker’s website as many of them have a business name that is different from their name on the website.
- Didn’t find anything? You might have been scammed. Just contact the FCA (see the details below)
- Also beware of the “clone companies” that are a big problem nowadays and a clear indication of a forex scam. They seem to be FCA regulated forex brokers but in fact they are not. In fact they piggyback on other successful brands and mimick them.
How to Contact the FCA
Do you want to file a complaint or are you being scammed? You can contact the FCA by calling them from Monday until Friday 8am to 6pm via 0800 111 6768 (freephone) or 0300 500 8082 from the UK, or +44 207 066 1000 from abroad.
Understanding How the FCA Operates
It’s critical to note that the FCA is entitled to revoke licenses if the situation asks for it, as well as oversee the materials created for marketing and promotional purposes, to ensure their legitimacy. In addition to that, the FCA is involved in auditing company financials. This is essential in order to establish the reliability index of each company. This way, consumers can be confident that they get a decent deal whenever they collaborate with financial companies.
So, when it comes to the forex brokers that work under the FCA, the obvious conclusion is that these firms are legitimate, and they address the needs of the client, not the other way around.
With that in mind, you might wonder whether the same high standards apply in the regulation of Forex brokers. Yes, according to the law, all the trading forex brokerages that function in the UK must get a license from the FCA.
Aside from this, the FCA must provide them a regulation. This is primarily why one might think that the FCA regulated forex brokers are reliable. The code of conduct entails a wide range of specifications the brokers must abide by. The code of conduct is the result of the prescription by the Financial Services Act of 2012.
When the situation asks of it, the FCA will resort to these laws, in order to protect the rights of the consumer.
Does the FCA Work for the Benefit of the Traders?
Essentially, the FCA actually oversees the way in which financial companies work with their customers. Hence, it could be said that the FCA actually works in the benefit of the consumer, focusing on promoting healthy competition in the marketplace.
Nevertheless, considering that the FCA is actually a regulatory body, this means it doesn’t facilitate help or mediation services when it comes to issues between the brokerages that are FCA regulated and their customers.
In spite of this, it is highly advisable to check whether a broker is regulated by the FCA, specifically if you want to assess the authenticity or reliability of a regulation. Another idea would be checking with the FCA warning list.
The bottom line
FCA is one of the most respected trading industry authorities that establish the highest protective tools and keeps market integrity through its strong influence and monitor of the situation. The FCA enhanced its responsibilities to the financial and traders sectors by transparent ways the agency determines policies and carries its supervision functions. Also, as the main message of FCA is to only cooperate with authorized firms.
To get some reputable brokerages, you can check their reviews on the AtoZ Markets Forex brokers review page. There, you can read about our in-depth review from real traders.