In short
- FCA "CASS" rules require retail client money to be held separately from the firm's own money.
- Firms must reconcile client money regularly.
- If a firm fails, segregated money is returned to clients, with the FSCS covering eligible shortfalls.
What segregation means
Client money is held in designated client bank accounts, typically on trust for clients, at approved banks. It isn't the broker's money, so it shouldn't be available to the broker's creditors if the business fails.
Key CASS protections
| Rule | Purpose |
|---|---|
| Segregation in client accounts | Separates your money from the firm's |
| Regular reconciliations | Checks the firm holds what it owes clients |
| Diversification of banks | Reduces dependence on a single bank |
| CASS oversight and audits | Senior responsibility and independent reporting |
| No title transfer for retail clients | Retail clients' money can't be transferred into the firm's ownership as collateral |
If a broker fails
- An administrator takes control, often under the special administration regime.
- Segregated client money is pooled and returned to clients, minus some administration costs.
- Eligible clients can claim any shortfall from the FSCS, up to £85,000.
What to check
- The broker's client money disclosure in its legal documents
- That you're a retail client (title transfer can apply to professionals)
- That the entity holding your money is FCA-authorised
Frequently asked questions
Is segregated money the same as FSCS protection?
No. Segregation keeps your money separate from the broker's; the FSCS can compensate eligible clients (up to £85,000) if there's still a shortfall after a failure.
Can a broker use my money as margin?
Your money supports your own positions as margin. It can't be used to fund the broker's business.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money.