How Freetrade complies with FCA rules to protect your money

This article explains, in practical terms, how client money and assets are kept separate, and Freetrade’s compliance checks.

Is Freetrade Limited FCA regulated?

Freetrade Limited is authorised and regulated by the Financial Conduct Authority (FCA). Among other rules and obligations, this means Freetrade must follow FCA rules on how to hold and protect customer money and investments.

How to check if a company is FCA regulated

You can verify Freetrade’s status on the FCA Register by searching for Freetrade Limited and checking the permissions listed there. This is the public record of who is authorised and regulated.

Where is my money held at Freetrade under FCA rules?

When you add cash to your account, or receive cash from selling investments, that cash is treated as what is called ‘client money’. Under FCA client asset rules, firms must keep client money separate from their own corporate cash.

Freetrade opens specific client money bank accounts that are used solely for handling clients’ money. These accounts are separate from Freetrade’s own operating accounts. Because the bank knows it’s a client money account, in the unlikely event that Freetrade becomes insolvent it would be kept separate from Freetrade’s account. 

Which banks does Freetrade use?

Freetrade mainly uses UK-regulated banks for client money: Lloyds, Barclays, and NatWest. It also uses JPMorgan via its London branch entity, and one account held with JPMorgan’s US entity.

Segregation is designed so that clients’ money is not mixed with the firm’s money. In the unlikely event Freetrade fails, there is a clear separation between client money and the firm’s assets.

How are custody assets segregated?

Your investments, such as shares and ETFs, are also segregated. But safe custody of assets works differently.

Freetrade opens client transaction accounts with custodians in the name of Freetrade Nominees Limited. This nominee company is the name in which assets are registered (legal ownership sits with the nominee), while customers are the beneficial owners.

Put simply: your investments are not registered directly in your name on a market register. They’re held in the nominee structure, and you remain the beneficial owner with the rights to the value of those holdings. This is common practice in retail and institutional markets where it can be more efficient to register shareholdings in this way.

How Freetrade’s client asset compliance is checked

Client asset compliance requires ongoing controls, including internal controls and monthly oversight. Freetrade also has internal governance that monitors this.

In addition, Freetrade is required to complete an annual third-party audit of its arrangements. Freetrade’s auditor is PwC (and it has always used a Big Four audit firm).

On top of the annual audit cycle, Freetrade sometimes engages external subject matter consultants and legal counsel, particularly when introducing new products, to help ensure continued compliance.

What happens if a firm doesn’t keep customer assets safe?

The FCA has powers to restrict a firm’s business, impose financial penalties, and disqualify individuals who are held responsible. It can also require a skilled person review, an independent third party appointed to assess culture, controls, and compliance, often before further action is taken. This isn’t theoretical: the FCA has fined firms in the past, including Bank of New York Mellon, which received a £126 million penalty in 2015.