Verify regulatory status
Check whether a firm is authorised or registered with the relevant regulator before using its services. In the UK, use the FCA Firm Checker to confirm it has permission for the products you need. Authorised firms must meet certain standards; registered firms cannot provide regulated products needing authorisation. Avoid firms that are unauthorised or listed as no longer authorised or revoked. Watch for clone firms that copy genuine authorised firms, and verify contact details match the official register.
Check permissions and protections
Confirm the firm has correct permissions for your specific activities. Firms may offer both regulated and unregulated products, with regulators having more limited powers over the latter. If using an appointed representative, check with the principal what activities are permitted and how you are protected. If the representative exceeds these activities, you may lose access to the Financial Ombudsman and compensation schemes. Similarly verify payment agent permissions with their principal.
Review product terms and risks
Read the product disclosure statement and terms and conditions, as these vary between issuers. For CFDs, understand they are high-risk leveraged products where most retail investors lose money. Losses are based on full position value, not just margin deposited. Check whether you would be classified as retail or wholesale, as wholesale status removes protections including negative balance coverage and dispute resolution access. In Australia, verify the provider holds an Australian financial services licence before dealing with them.
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