Investing Basics

What happens if your stockbroker goes bust

What happens if your stockbroker goes bust, how FSCS protection works, and what UK investors should check before opening an account.

By Ben Walker · May 23, 2026

A stockbroker or investment platform failing is not the same thing as your shares falling in value. One is a firm failure problem. The other is normal investment risk. Knowing the difference helps you ask better questions before you open an account and stay calmer if a platform ever enters administration.

Reviewed by Priya Nair, Editorial Director · May 23, 2026, 12:33

In this article

The Short Version

Key Takeaways

If a broker fails, administrators normally try to reconcile client records and transfer cash and investments to another provider.
Client money and custody assets should usually be held separately from the broker’s own assets under FCA client asset rules.
FSCS investment protection can cover eligible losses caused by an authorised firm failing, up to £85,000 per eligible person, per firm.
FSCS does not compensate you because a share, fund or portfolio falls in value.
Keep your own records, check authorisation, and know who actually holds your cash and investments.

What actually happens if a broker fails

If a UK stockbroker or investment platform goes bust, the first practical step is usually an administration process. The administrator has to work out what the failed firm owes, what client money and investments are held, and whether the firm’s records match the assets held with banks, custodians or nominees.

That process can be slow, but it does not automatically mean every customer has lost their investments. In a normal platform account, the broker should not treat client assets as its own property. The aim is usually to return or transfer those assets, often by moving accounts to another authorised provider.

This is why broker failure is different from market risk. If you own a share and the share price halves, that is an investment loss. The Financial Services Compensation Scheme is not there to make that loss good. The FSCS investment protection guide says investment claims cannot be accepted for poor investment performance, because investments can go down as well as up.

Why client assets should be separate

The key protection is separation. FCA rules on client money and custody assets are designed so a firm holding client money or safe custody assets follows CASS. The FCA client money and assets rules is the official starting point.

In plain English, the broker should keep client money and client investments away from the firm’s own money and assets. Cash may be held in client bank accounts. Investments may be held through nominee or custody arrangements, with the platform’s records showing which customer is entitled to what.

That does not make failure painless. Administrators still need records and reconciliations. If records are poor, assets are missing, or costs have to be met, customers may face delays or a shortfall. But the separation principle is why a broker collapse is not supposed to put your portfolio straight into the pot for the firm’s creditors.

A broker help page can show how platforms describe this in practice, but only as supporting context. The FCA and FSCS remain the authorities.

What FSCS protection does and does not cover

FSCS protection matters most if an authorised investment firm cannot return money or investments it owes to eligible customers. For investment claims against firms declared in default after 1 April 2019, FSCS states the limit is up to £85,000 per eligible person, per firm.

The phrase “per firm” matters. Two accounts with the same authorised firm do not automatically give you two separate £85,000 investment limits. The grouping can depend on the authorised firm behind the brand, so it is worth checking the legal entity rather than relying only on the trading name.

It is also important not to treat FSCS as a market-loss insurance policy. If your fund falls because markets fall, FSCS is not there to top it back up. If you buy a poor investment, pay too much, panic sell, or hold a company that disappoints, those are investing risks. The scheme is about firm failure and eligible claims, not making all investing safe.

If administrators recover and transfer all of your assets, FSCS may not be needed. If there is a shortfall, eligibility and limits become more important. That is why the £85,000 figure is useful, but not the whole story.

What to check before opening an account

Before choosing a platform, check the firm independently. The FCA says the Financial Services Register is the official public record, and its FCA guidance on checking authorised firms explains when to use it. Do not rely on a link sent in an advert, email or social message.

Look for the firm’s authorised name, firm reference number, permissions and contact details. Check whether you are dealing with the authorised firm itself or an appointed representative. If anything does not match, pause.

Then read the boring parts: custody, client money, nominee arrangements, transfers, complaints and charges. Our guide to how to open a share dealing account in the UK covers the account-opening basics, while what does it actually cost to invest in shares keeps platform charges in view.

If you are unsure what you own when you buy a share, start with what is a share. Ownership, nominee accounts and custody are easier to judge once the basic share structure is clear.

Records a private investor should keep

Do not let your broker’s portal be your only record. Keep account statements, contract notes, transfer confirmations, ISA or SIPP documents where relevant, dividend records, cash balances, and the legal name of the firm you use. Save them somewhere you can access if the app is unavailable.

A simple quarterly routine is enough. Download your statement, check that cash and holdings look right, save the file with the date, and keep a note of your account number. If you transfer investments, keep the instruction and completion confirmation.

A Worked Example

Imagine you have £60,000 in shares and £5,000 in cash with an FCA-authorised platform. The platform fails, but administrators confirm that the shares and cash are properly recorded and can be transferred. The main problem may be delay rather than permanent loss.

Now imagine a worse version. You have £120,000 with the same platform, and reconciliation finds a £20,000 shortfall linked to firm failure. If you are eligible and the claim meets FSCS rules, the £85,000 limit may be enough to cover that shortfall. If the shortfall were bigger, the cap could still matter.

Real administrations can involve costs, disputed records and long timelines. The lesson is not that £85,000 is a magic safety line. Client asset separation comes first, then FSCS may help if firm failure leaves an eligible loss.

What to do if your broker enters administration

First, do not respond to panic messages, social media rumours or anyone offering to “recover” your account for payment. Go to the firm’s official website, the administrator’s updates, the FCA Register entry and FSCS material. Use contact details found independently.

Second, download or gather your own records if the portal is still available. Save your latest statement, cash balance, holdings, account number and recent trades. Third, avoid making fresh deposits or transfer instructions until the administrator or receiving provider gives clear instructions.

Fourth, watch for deadlines. Administrators may ask customers to verify details or accept a transfer. If you think a holding or cash balance is missing, raise it through the official process and keep a dated record.

What This Means For You

If you are a UK beginner, broker failure should be on your checklist, but it should not dominate your investing life. Use authorised firms, check them independently, keep records, understand the £85,000 FSCS investment limit, and know that market losses are still yours to bear.

Do enough due diligence to avoid obvious platform and fraud risks, then spend most of your energy on costs, diversification, behaviour and whether the investments themselves suit your situation.

In Plain English

If your broker goes bust, your investments should usually be separate from the broker’s own assets, and administrators will try to return or transfer them. FSCS may help if an authorised firm failure leaves an eligible loss, up to £85,000 per person, per firm.

It does not protect you from shares falling. Keep your records. Check the FCA Register before opening an account. Do not confuse platform failure protection with investment safety.