Verify UK Authorisation
Before opening an account with any firm offering financial services in the United Kingdom, confirm its status through the FCA Firm Checker or the Financial Services Register. Authorised firms have permission to provide regulated products and services and must meet specific standards, whereas registered firms face more limited requirements and cannot offer regulated services needing full authorisation. The register also reveals whether a firm is no longer authorised or has had its permissions revoked, which means it should be avoided.
Check Permissions and Protections
A firm's entry on the register shows exactly which activities it may conduct, and you should ensure these permissions match the services you intend to use. Dealing with an unauthorised firm or one lacking the correct permissions removes your access to the Financial Ombudsman Service and the Financial Services Compensation Scheme. If a firm operates as an appointed representative, verify its principal's details and confirm what activities the principal has approved, since protection may not apply if the representative exceeds its scope.
Assess CFD-Specific Risks
Contracts for difference are over-the-counter derivatives traded directly with the issuer rather than on a licensed exchange, creating counterparty risk that depends on the provider's solvency. In Australia, CFD issuers must hold an Australian financial services licence, and retail clients receive mandatory negative balance protection and margin close-out rules. Overseas providers without this licence leave you without access to the Australian Financial Complaints Authority, and consumer protections under Australian law will not apply.
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