Financial scams in the financial world have increased more and more. The Internet and social networks have made it possible for anyone with a website and a hoax to reach millions of people. That is why we increasingly need more mechanisms or advice to know if the broker where you invest is regulated and reliable.
Without a doubt, the British regulator has become the world reference in terms of security and investor protection. Today I will tell you all about them and which brokers have this regulation. Also, I will tell you where Financial services can get FCA authorisation.
What is the FCA?
The FCA is the British regulator charged with supervising the financial, banking and insurance markets. It would pass for just another national regulator, but remember that London is one of the most important financial centres in the world.
Most of the world’s big investment banks and brokers have an office there, and before BREXIT, they could operate throughout the European Union with their British license. If you’re wondering what the FCA means, it stands for Financial Conduct Authority.
What powers does the FCA have?
The FCA has the ability to temporarily ban assets or services for up to one year during the term of the study, permanently preventing a certain product or service. In addition to supervising banks and financial institutions, to guarantee that clients receive fair treatment, prevent bad competition practices and exercise control over financial risk, reducing the chances that it occurs.
What does it mean for a broker to be regulated?
If a broker is regulated:
- It must have the money of the clients separated and not be able to mix it with that of the broker.
- It must pass quarterly regulator reviews.
- It must have a strict registration process (KYC: Know your Customer)
- It must check that the investor has sufficient knowledge to operate complex products.
- It must limit the leverage available on CFDs and Forex.
How to know that the FCA regulates the broker?
There are certain parameters to take into account and follow certain steps to know that the FCA regulates a broker:
- First, go to the broker’s website.
- Look for and verify the license number that the regulator granted you.
- The license number appears at the end of the Web or even in a section “who we are” or on “regulation”.
- Once you find the license number copy the registration number
- Open the website of the regulator, in this case, fca.org.uk. Verify that the license number matches.
- After opening the website of the FCA regulator, they must open the drop-down in the “Consumers” section and check “Check if a firm is FCA authorised”. A new page will be opened where they must verify by clicking on the “Search the register” button.
- As the last step, a page will open where you must enter the FCA license number of the broker in the search engine.
If the broker is regulated, an image should appear confirming. If the broker is not regulated, a message will appear informing that no registration with said number has been found, which means that the FCA does not regulate the broker.
Another easier way is to write FCA Register in Google and access the search engine for registered entities. You write the name of the entity or commercial brand, and you will find out if it is regulated or not.
- Trademark: name used by the broker or its website
- Regulated matrix: the same broker can use several brands; some are regulated, and others are not.
Suppose a broker finds getting into the FCA register hard but needs help with an easier way to get the FCA authorisation. In such a scenario, you can reach out to Mema Consultants, an appointed representative FCA, to help ease your challenges. Our compliance consultant is here to set you up for anything you want regarding FCA.