It’s a fair question when you hand your savings to an app. The good news: with a properly regulated broker, your investments are usually not part of the broker’s own money.
Rule 1: segregation
Regulated brokers must keep client assets separate from their own. Your shares and ETF units are held in your name or in a client account at a custodian. If the broker fails, those assets are not supposed to be used to pay its creditors; they’re transferred to another firm or returned to you. This can take time, but the assets are still yours.
Rule 2: compensation schemes
Compensation schemes step in when something has gone wrong — for example, if client assets are missing because of fraud or errors. They have limits:
| Where the broker is regulated | Scheme | Investor protection |
|---|---|---|
| EU | National schemes under EU rules | At least €20,000 per investor (many countries offer more) |
| United Kingdom | FSCS | Up to £85,000 per person per firm |
| United States | SIPC | Up to $500,000, of which up to $250,000 in cash |
Cash held at a broker that’s also a bank may additionally fall under deposit guarantees (in the EU usually €100,000 per bank). Rules differ, so check your broker’s own explanation.
These schemes don’t protect you from investments simply losing value.
What’s riskier
- Unregulated or offshore-licensed platforms with weak supervision.
- CFDs and other contracts where you don’t own the underlying asset — you’re a creditor of the broker. Real shares vs CFDs.
- Lending programmes where your broker lends out your shares (check the terms and collateral).
- Crypto platforms, which in many countries aren’t covered by these schemes.
Your checklist
- Find the broker’s licence number and look it up in the regulator’s register. Your country page names your regulator.
- Check which entity you’d actually be a client of — big platforms have several.
- Read the broker’s page on client asset protection and the scheme that covers you.
- For large amounts, consider splitting between two brokers.
This guide is general education, not personal financial advice. Your situation, country and tax rules matter. Disclaimer.