Brand, entity, licence: what the names on a broker’s website mean

Three different kinds of name appear on a broker’s website, and they are easy to confuse. The brand is the name in the logo and the advertising. The legal entity is a registered company that signs contracts and holds money. The licence is a permission granted to one specific legal entity by one specific regulator.

A single brand often uses several legal entities, each in a different country and each with its own licence, or with none. Which one you deal with is usually decided by where you live and the type of client you are. It is the most important fact about your account, and it is often in small print.

Where to find the legal entity

Look in three places:

• The website footer. Regulated firms usually list each entity’s name, registered address and licence number here.
• The client agreement. The opening clauses name the company you are contracting with. This is the one that counts if the footer lists several.
• The account application. Some firms only confirm the entity once you choose your country of residence.

If you cannot find which company you would contract with, that is useful information in itself.

A company number is not a licence

Two kinds of register exist, and they prove different things.

A company registry records that a company exists. In the UK, for example, Companies House incorporates and dissolves limited companies, and registers company information and makes it available to the public.1 A company number proves that a company has been incorporated. It says nothing about whether that company may deal in financial products or hold your money.

A regulator’s register records authorisation. The UK’s Financial Services Register is a public record of firms and individuals that are, or have been, authorised by the Financial Conduct Authority or the Prudential Regulation Authority.2 An entry there, with the right permissions, is what allows a firm to offer regulated services.

So a firm that quotes only a company number, or a registration with a body that does not supervise investment firms, has not shown you that it is licensed.

Same brand, different protections

Because each entity is licensed separately, clients of the same brand can have very different protections. Compensation schemes are a clear example. In the UK, the Financial Services Compensation Scheme can protect investments up to £85,000 per eligible person, per firm (for firms that failed on or after 1 April 2019), but only where the provider was authorised by the FCA or the PRA and has gone out of business.3 It does not pay out for investments that simply lose value.3

A client served by an entity licensed elsewhere is not covered by that scheme, whatever the brand’s website says about its UK licence. The same logic applies to negative balance protection, leverage limits and access to an ombudsman: they follow the entity and the rules that govern it, not the brand.

Questions to answer before you open an account

1. Which legal entity will hold my account?
2. Which regulator authorises that entity, and does its register entry match the firm’s details?
3. What permissions does that authorisation include?
4. Will I be classed as a retail or a professional client, and what changes if I am professional?
5. Which compensation scheme, if any, covers clients of that entity?
6. Where, and with which banks, is client money held?

How our profiles show this

Every Trading Trust Index profile lists the legal entities behind a brand, what each one does, where it is incorporated and which licences it holds, with each licence checked against the regulator’s register and dated. Our assessment of regulatory status includes whether clients can tell which entity serves them.