Investor Compensation Schemes for Forex and CFD Traders: What FSCS, ICF and Others Cover
What happens to your money if a broker fails, how compensation schemes in the UK, EU and elsewhere work, the limits, and what they do not cover.
I wrote this guide based on how I actually trade gold. No theory — just what works after 10 years.
Key takeaways
- | Country / region | Scheme | Limit per eligible client |
- Client money the failed firm should have held for you but cannot return.
- Trading losses. If your position lost money, that is not a claim.
- Strong regulators require brokers to keep client money in segregated accounts, separate from the firm's own money. If...
- 1. Know which entity holds your money. See [which company holds your account](/guides/regulation/which-company-holds-...
- Does FSCS cover me if I live outside the UK? FSCS eligibility depends on the firm being UK-authorised and on the clai...
A compensation scheme is the safety net for one specific event: your broker fails and cannot return client money. It does not cover trading losses, bad advice or a broker that is still operating but refusing to pay. Understanding the limits helps you decide how much to keep with any one firm.
The main schemes
| Country / region | Scheme | Limit per eligible client |
|---|---|---|
| United Kingdom | Financial Services Compensation Scheme (FSCS) | Up to £85,000 for investment claims |
| Cyprus | Investor Compensation Fund (ICF) | Up to €20,000 |
| Ireland | Investor Compensation Company (ICCL) | 90% of the loss, up to €20,000 |
| Germany | Compensation scheme of securities trading firms (EdW) | 90% of the loss, up to €20,000 |
| Other EU states | National schemes under the EU Investor Compensation Schemes Directive | At least €20,000 |
| Canada | Canadian Investor Protection Fund (CIPF) | Coverage for eligible accounts at member firms, within its limits |
| Australia | No general compensation scheme for CFD clients | None |
| Most offshore jurisdictions | Usually no scheme | None |
Limits and eligibility rules change; check the scheme's own website for current figures.
What compensation schemes cover
- Client money the failed firm should have held for you but cannot return.
- Within the limit, per person, per firm.
What they do not cover
- Trading losses. If your position lost money, that is not a claim.
- A firm that is still trading but slow to pay. That is a complaint, handled by the regulator or ombudsman.
- Accounts held with another entity of the same group, such as an offshore subsidiary.
- Professional clients in some schemes.
Why segregation matters more than compensation
Strong regulators require brokers to keep client money in segregated accounts, separate from the firm's own money. If the firm fails, segregated client money is returned to clients first, and the compensation scheme covers any shortfall up to the limit. Strict segregation plus a compensation scheme is the strongest combination available to retail traders.
How to use this information
- Know which entity holds your money. See which company holds your account.
- Keep balances near what you actually trade. Withdraw profits periodically.
- If you trade large amounts, spread them across firms so each balance is within the scheme limit.
- Check for a scheme in your broker's documents, usually in a "client money" or "investor compensation" section.
Our broker rating gives extra protection points when the entity that holds a client's money is covered by a compensation scheme.
Questions traders ask
Does FSCS cover me if I live outside the UK? FSCS eligibility depends on the firm being UK-authorised and on the claim, not on your nationality. If your account is with the UK entity, you may be eligible. Check with FSCS.
Does SIPC cover forex in the US? No. SIPC covers securities and cash at member broker-dealers. Forex and futures accounts are not SIPC-protected.
Is €20,000 per account or per person? Generally per person per firm.
I don't predict. I prepare. Every trade I share here is placed with real money, in real time. No indicators, no noise — just price action and experience.
— Happy trading, Lin
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