How to Choose a Broker in the UK (FCA Rules, Costs and Account Types Explained)

To choose a broker in the UK, verify FCA authorisation, understand the account types offered (CFD, spread betting, ISA, SIPP), compare total trading costs, and review leverage and margin policies. UK regulation provides important protections, but brokers still differ significantly in pricing, platforms, and execution quality.

Many UK traders assume that all brokers operating in the UK provide identical protections and pricing structures. This is incorrect. Some brokers are fully authorised by the Financial Conduct Authority (FCA). Others operate under overseas entities and passport services into the UK market. The core mistake is failing to confirm the exact legal entity and protections attached to the account. Additionally, traders often confuse spread betting, CFD trading, and share investing without understanding tax and risk differences. Choosing a broker without clarifying these distinctions can result in unsuitable account selection or unnecessary cost.

UK brokers differ in regulatory structure, product offering, pricing model, and account flexibility. FCA-authorised brokers must comply with leverage caps for retail traders, enforce negative balance protection, and segregate client funds. Some brokers offer spread betting accounts, which may have different tax treatment compared to CFDs. Others provide Stocks & Shares ISAs or SIPPs for long-term investing. Pricing models vary between spread-only, commission-based, and subscription structures. Platform offerings also differ — some focus on mobile simplicity, others provide advanced charting and algorithmic trading capability. These structural differences directly influence suitability depending on trading style and financial goals.

UK brokers charge in different ways depending on product type. For CFDs and spread betting, costs typically include spread, commission (if applicable), and overnight financing. For share dealing accounts, investors may face platform fees, dealing commissions, and foreign exchange charges on overseas stocks. Spread betting may not incur capital gains tax in the UK, but this depends on individual circumstances and tax rules can change. Currency conversion charges are often overlooked, particularly when trading US shares. Comparing a five-year projected cost based on portfolio size or expected trading frequency provides a clearer picture than focusing solely on headline spreads.

FCA regulation requires brokers to segregate client funds from company capital and adhere to strict conduct standards. Retail clients benefit from leverage limits and negative balance protection for CFD trading. The Financial Services Compensation Scheme (FSCS) may apply in cases of firm insolvency, subject to eligibility limits. However, FCA regulation does not protect against trading losses. Traders should verify the broker’s FCA registration number on the official register. It is also important to confirm which legal entity holds your account, especially if the broker operates multiple subsidiaries.

Platform reliability is critical in volatile markets. UK brokers may offer MetaTrader platforms, proprietary web-based systems, or mobile-first applications. Execution speed, slippage transparency, and available order types vary. Some brokers offer guaranteed stop-loss orders for a fee. Others restrict certain trading practices. Long-term investors may prioritise dividend reinvestment tools and portfolio reporting, while active traders may focus on charting tools and execution speed. Testing a demo account and then a small live account helps assess real-world functionality.

Trading leveraged products such as CFDs or spread bets involves significant risk. Leverage amplifies both gains and losses. Market volatility can lead to rapid capital depletion. Even within FCA regulation, market risk remains unchanged. Spread betting and CFD trading are speculative and not suitable for all investors. Long-term share investing also carries market risk, including potential loss of capital and currency risk when investing internationally. Broker choice can reduce operational and structural risk, but it cannot eliminate market volatility.

Highly risk-averse individuals uncomfortable with capital fluctuation should reconsider leveraged trading products. Traders seeking extremely high leverage may find UK-regulated brokers restrictive due to regulatory caps. Very small account holders should evaluate whether platform fees outweigh benefits. Investors unwilling to compare full cost structures may inadvertently select expensive account types.

Step one: verify FCA authorisation and confirm registration on the official register. Step two: determine whether you require a CFD, spread betting, ISA, or SIPP account. Step three: estimate trading frequency or average portfolio size and calculate projected annual costs. Step four: review leverage limits and negative balance protection policies. Step five: assess platform functionality and execution transparency. Step six: test deposit and withdrawal procedures with a small amount. Step seven: compare at least three FCA-authorised brokers side by side before opening an account. Choose the broker whose structure aligns with your risk tolerance and financial objectives.

Now compare FCA-regulated brokers side by side using our UK broker comparison tables. Filter by product type, pricing model, and minimum deposit. You can also explore our Best UK Brokers pages segmented for beginners, low-cost trading, and long-term investing.