In short
- Large broker groups often run several companies under different regulators.
- Your protections depend on the legal entity in your client agreement, not the brand name.
- FCA entities give you leverage limits, negative balance protection, the Financial Ombudsman and FSCS cover.
- Offshore entities may offer higher leverage and bonuses — precisely because those UK protections don't apply.
One brand, several companies
International brokers typically operate a group of companies: one authorised by the FCA for UK clients, one regulated in the EU, perhaps one in Australia, and one or more in "offshore" jurisdictions such as Mauritius, Seychelles or Vanuatu for the rest of the world. They share a logo and a website, but they are separate legal entities with separate rules.
That's why two traders using the same brand can have very different experiences — different leverage, different minimum deposits, different platforms, and very different protections if something goes wrong.
What FCA regulation gives you
| Protection | FCA-authorised entity | Typical offshore entity |
|---|---|---|
| Retail leverage cap | 30:1 majors, 20:1 minors/gold/major indices, lower on other assets | Often 500:1 or more |
| Negative balance protection | Mandatory for retail clients | Depends on the firm |
| Margin close-out | At 50% of required margin | Varies |
| Client money segregation | Required under FCA CASS rules | Depends on local rules |
| Compensation scheme | FSCS, up to £85,000 for eligible claims | Usually none, or a smaller private fund |
| Independent complaints | Financial Ombudsman Service (free) | Local body, if any |
| Bonuses and incentives | Banned for retail CFD clients | Often offered |
| Risk warning with % of losing accounts | Required | Rarely required |
Why offshore offers look more attractive
Higher leverage and deposit bonuses are the main reasons traders are tempted to open accounts with offshore entities. But both are restricted in the UK for a reason: after reviewing retail CFD outcomes, regulators concluded that high leverage and incentives were driving losses. A 500:1 account doesn't make you a better trader — it just means a 0.2% move against you can wipe out your margin.
How to check which entity you're dealing with
- Open the broker's client agreement (or terms of business) and find the company name and registered address.
- Search that exact company name on the regulator's register — for the UK, the FCA Financial Services Register.
- Check that the register entry is "Authorised" and that the permissions include dealing in investments as principal.
- During sign-up, watch for wording such as "You are being onboarded by [Company] Ltd, regulated by…" — this tells you which entity you'll join.
"Professional client" status
Some UK brokers let experienced traders opt up to professional client status, which removes retail leverage limits and some protections. You normally need to meet at least two of three criteria: significant trading activity over the past year, a financial portfolio above €500,000, or relevant professional experience in finance. It's a legitimate option for qualifying traders — but you should understand exactly which protections you're giving up.
Bottom line
For UK residents, the safest choice is an account held by an FCA-authorised entity. Higher leverage and bonuses from offshore companies come at the cost of the protections that matter most when something goes wrong.
Frequently asked questions
Is an offshore forex broker illegal?
Not necessarily — many offshore entities are licensed in their own jurisdiction. But firms that aren't authorised by the FCA generally can't actively market investment services to UK residents, and you lose UK protections such as the FSCS and the Financial Ombudsman Service.
How do I know which entity holds my account?
Check the client agreement and account-opening documents: they name the legal entity, its registered address and its regulator. The website footer usually lists all group entities, not necessarily yours.
Why do some brokers offer 500:1 leverage?
Offshore entities aren't bound by FCA or ESMA product rules. In the UK, retail leverage is capped at 30:1 on major currency pairs.
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.