Investor Protection

Provider Risk

A risk that is commonly forgotten is provider risk, which is associated with the financial health of a broker. The risk is that the stockbroker that you invest with goes bust, putting your investments in jeopardy. 

When picking a broker, they should be registered and authorized by the financial conduct authority (the FCA). That way your investments will be protected under the Financial Services Compensation Scheme. 

If your investments are protected and your broker goes bust, you’ll be eligible to receive up to £85,000 in compensation. Obviously, a lot of investors have more than this figure and could lose a lot of money. 

It’s important to invest with a reputable broker. Many of which are listed on the stock market (such as AJ Bell or Hargreaves Lansdown), allowing you to keep an eye on their financial performance. 

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