Check Regulatory Authorisation
Before opening an account, confirm whether a firm holds proper regulatory status. In the United Kingdom, the Financial Conduct Authority maintains the Firm Checker and Financial Services Register, which show whether a firm is authorised or merely registered. Authorised firms must meet specific standards and have permission to offer regulated products, while registered firms face more limited requirements and cannot provide services needing full authorisation. You should verify that a firm possesses the correct permissions for the specific products you intend to use, as dealing with an unauthorised firm removes access to the Financial Ombudsman Service and the Financial Services Compensation Scheme. The register also reveals whether a firm's authorisation has been revoked or cancelled, which indicates you should avoid that firm entirely.
Verify Contact Details
Cross-reference the contact information a broker provides with the details listed on the official register. The FCA's records display registered names, trading names, main business addresses, and complaint contacts as confirmed by the firm itself. Fraudulent clone firms sometimes impersonate legitimate authorised companies, so matching phone numbers, email addresses, and websites protects against this risk. If a firm employs appointed representatives or agents, you should also confirm with the principal firm what activities those representatives are permitted to conduct, since protection from complaints schemes may not apply if representatives exceed their authorised scope.
Assess Product-Specific Risks
For contracts for difference, understand that these leveraged derivatives amplify both gains and losses based on the full position value rather than your margin deposit. In Australia, CFD providers must hold an Australian financial services licence, and retail clients receive certain protections including negative balance protection and margin close-out rules. Overseas providers without local licensing remove access to dispute resolution bodies such as the Australian Financial Complaints Authority. You should review the product disclosure statement for fee structures and terms, recognise that most retail CFD traders lose money, and consider whether you can afford to lose your entire investment before proceeding.
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