What a compensation scheme covers, and what offshore gives up
A compensation scheme pays when your broker fails and the money is not there. The UK pays £85,000 on investment claims, Cyprus €20,000, and Australia nothing at all for forex. Segregation is a different thing, and brokers rarely mark the difference.
A compensation scheme pays you when your broker fails and your money is not there. In the UK that is the FSCS, at £85,000 per eligible person per firm for investment claims. In Cyprus it is the ICF, at a maximum of €20,000. In Australia, in Seychelles, in Mauritius and in the Comoros, for a forex broker, it is nothing at all.
This is the pillar that decides what happens on the worst day, and it is the one broker marketing is vaguest about. Three things get conflated: the size of the scheme, whether there is a scheme, and whether segregation is the same as one. It is worth separating them.
The £120,000 headline that does not cover your trading account
On 1 December 2025 the FSCS deposit limit rose from £85,000 to £120,000 per person per institution, and the temporary high balance allowance went from £1 million to £1.4 million. It was widely reported, and it is a real increase.
It does not apply to you as a trading client. The investment limit did not change and remains £85,000 per eligible person per firm. Deposits means money in a bank or building society account. Investment claims, which is the category a failed broker falls into, sit under the separate and lower limit.
If you read the coverage last December and came away with £120,000 in mind, that figure is not the one protecting your positions.
For completeness, the FSCS investment limit is £85,000 for firms that failed on or after 1 April 2019. For failures between 1 January 2010 and 31 March 2019 it was £50,000, which matters only if you are pursuing an old claim.
Segregation is not compensation
Almost every broker page about client money says the same thing: funds are held in segregated accounts with tier-1 banks, separate from company money. That is a genuine protection and it is worth having. It is also not a compensation scheme, and brokers rarely mark the difference.
Segregation is a rule about where money sits. Client money goes in a client account, the firm’s money goes in the firm’s account, and the firm may not use yours to pay its own bills. If the firm fails and every pound is where it should be, segregation is what lets an administrator return it to you.
Compensation is a fund that pays when it is not there. Which happens: through a shortfall in the client account, through commingling that nobody caught, through the administration costs of working out who is owed what, or through outright fraud. Segregation is the rule. Compensation is the thing that answers when the rule was broken.
A broker telling you it segregates client funds has told you it follows the rule. It has told you nothing about what exists if it did not.
What each regime actually provides
| Regime | Compensation for a failed forex broker | Limit |
|---|---|---|
| UK, FCA / FSCS | Yes, investment claims | £85,000 per eligible person, per firm |
| Cyprus, CySEC / ICF | Yes | €20,000 maximum per covered client |
| Australia, ASIC | No. The Compensation Scheme of Last Resort explicitly excludes foreign exchange dealing and derivatives | Not applicable |
| Mauritius, FSC | No scheme | Nothing |
| Seychelles, FSA | No scheme | Nothing |
| Comoros, MISA | No scheme, and no supervisor with authority over the licence | Nothing |
The Australian row is the one that surprises people, because Australia does have a compensation scheme. The CSLR launched with a cap of $150,000 per eligible claim, and it requires an unpaid AFCA determination before it will pay. But its covered sectors are personal financial advice, securities dealing, credit provision and credit arranging. Dealing in foreign exchange and derivatives is on the excluded list.
So an ASIC-regulated CFD broker is a well-supervised firm with leverage caps and conduct rules, and its clients still have no compensation scheme behind them. Strong regulation and a compensation scheme are separate things, and this is the clearest illustration of it.
What “per eligible person, per firm” actually means
Three words in that phrase each do work.
Per eligible person. Not every client qualifies. Eligibility rules generally favour individuals and smaller businesses, and a large company or a professional counterparty may be outside the scheme even where a retail client is covered.
Per firm. Not per account. If you hold three accounts with the same failed firm, the limit applies once across all of them, not three times.
Per firm, not per brand. This is the one that costs people money, and it is the reason the next section exists.
The entity trap
The compensation scheme that covers you is the one attached to the entity named in your client agreement. That is frequently not the entity whose licence appears in the footer of the website you signed up on.
A group can hold an FCA licence and a CySEC licence and route clients outside Europe to an offshore subsidiary with neither. The brand is identical, the platform is identical, the logo on the statement is identical, and the protection is completely different. Nothing on the marketing site is false; you simply contracted with a different company from the one whose licence reassured you.
This is not hypothetical across the reviews on this site. Exness holds real licences and we still rate it High Risk, because the entity most retail clients contract with is offshore. TradeEU Global pairs an EU-implying name with a Mauritius licence and a Cyprus paying agent while excluding EU residents. WRPro has the same shape.
The check takes one minute: open the client agreement, find the company name and its registration number, and confirm that is the entity on the register you looked at. If they differ, the register you looked at is not the one that will matter.
What this looks like across the brokers we have reviewed
Most of the brokers on this site sit under a regime with no compensation scheme at all, which is why regulation and fund safety together carry 55% of the weight in our scoring method.
At the bottom of the range the question stops being about scheme size. The brokers holding a MISA licence from the Comoros have no compensation scheme and no supervisor with authority over the licence either, because the Comorian central bank has named the issuing body among structures purporting to license without authority. There is no fund, and there is also nobody to complain to.
You can see which regulator sits behind each broker we have examined on our regulator pages.
What to do with this before you deposit
- Find the entity in the client agreement, not the licence in the footer, and check that entity on the regulator’s register.
- Ask what scheme covers that entity, and for how much. “Segregated client funds” is not an answer to this question.
- Size your deposit against the limit, not against your ambition. If the scheme caps at €20,000, that is the number that matters, and a balance above it is uninsured in the event that matters most.
- Treat no-scheme as a real cost, not a technicality. An offshore broker may be perfectly honest. If it fails anyway, the outcome is the same as if it were not.
Frequently asked questions
What happens to my money if my forex broker goes bust?
An administrator attempts to return client money from segregated accounts. Where there is a shortfall, a compensation scheme pays the difference up to its limit, if one covers that entity. The UK FSCS pays up to £85,000 per eligible person per firm on investment claims and the Cyprus ICF up to €20,000. Under most offshore licences there is no scheme, and the shortfall is simply a loss.
Did the FSCS limit go up to £120,000?
For deposits, yes, from 1 December 2025. For investments, no. The investment limit stays at £85,000 per eligible person per firm, and that is the category a failed broker falls into. The higher figure applies to money held in bank and building society accounts.
Is segregated client money the same as being protected?
No. Segregation requires the firm to keep your money separate from its own, which helps an administrator return it if everything is where it should be. A compensation scheme pays when it is not, whether through a shortfall, commingling or fraud. Segregation is the rule; compensation is what answers when the rule was broken.
Does ASIC regulation include a compensation scheme for CFD traders?
No. Australia’s Compensation Scheme of Last Resort covers personal financial advice, securities dealing, credit provision and credit arranging, with a cap of $150,000 per eligible claim and a requirement for an unpaid AFCA determination. Dealing in foreign exchange and derivatives is excluded, so ASIC-regulated CFD clients have no scheme behind them.
How do I find out which compensation scheme covers me?
Identify the legal entity named in your client agreement, then check that entity on its regulator’s public register. The scheme follows the entity, not the brand, and groups routinely place clients in different jurisdictions with different entities. If the agreement names a company you have not checked, you have not checked your protection.
Sources
Financial Services Compensation Scheme, investment protection, £85,000 per eligible person per firm for firms failing on or after 1 April 2019, and £50,000 for failures between 1 January 2010 and 31 March 2019. Checked 19 September 2026.
FSCS deposit protection limit raised from £85,000 to £120,000 on 1 December 2025, with temporary high balance cover raised to £1.4 million, and the investment limit expressly unchanged. Checked 19 September 2026.
Cyprus Investor Compensation Fund, maximum €20,000 per covered client. Verified at source.
Australian Financial Complaints Authority, Compensation Scheme of Last Resort: covered sectors, the $150,000 cap per eligible claim, the unpaid-determination requirement, and the exclusion of foreign exchange dealing and derivatives. Checked 19 September 2026.
Financial Services Authority Seychelles and Financial Services Commission Mauritius: no statutory compensation scheme for retail clients of licensed securities dealers. Verified at source.
Comoros position as set out in our MISA guide, drawing on the Banque Centrale des Comores communiqué of 10 December 2025.