Freetrade safety

Whether a financial provider like Freetrade is safe and legit is an important and very legitimate question one can have. After all you trust Freetrade with your investment money and savings. It is also a very common question, we get this asked a number of times.

One thing worth bearing in mind: all the brokers that you find on BrokerChooser are regulated by at least one top-tier authority. So in this basic sense Freetrade is of course legit. Additionally, there are other factors you can take into account when you check the safety of Freetrade, e.g. if Freetrade is listed on any exchange, provide two-step login, disclose transparently its financial result, etc.

Here, we've collected and summarized the common questions on broker safety, enabling you to decide for yourself whether you consider Freetrade safe in your individual circumstances. We also compared Freetrade with two similar brokers.

Is Freetrade legit?
Freetrade DEGIRO Revolut
Banking background No Yes Yes
Broker listed on stock exchange No No No
Annual financial statements on website No No No
Mobile two-step authentication Yes Yes No
Broker ownership transparency No No No
Broker management transparency No No Yes
Broker is audited by the Big Four Yes No No

Freetrade safety
Things always worth considering

When you assess a stock broker it's best to think through the following aspects:

  • What authority or authorities regulate the broker? In other words who can you turn to if something goes south?
  • How much protection do you have?
  • For how long Freetrade has been in operation?
  • Is it publicly traded itself?
  • How transparent is it?
  • How much do they protect your account from unauthorized access?
  • What auditor audits the brokerage?

As you see there are a number of aspects above. But not all of them were created equal.

We think the most important feature is to be regulated by at least one trustworthy authority.

Comparing regulators

First and foremost, to gather a wider knowledge about one broker's safety, you should check the regulators of it. For this purpose, we sum up below the most important things to know about regulators and how to interpret them for your individual case.

Freetrade is regulated in the following countries and provide the following investor protection:

Freetrade regulation and investor protection
Freetrade
Country of regulation: UK
Investor protection amount: £85,000

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Don't forget that regulators are not created equal. Investor protection can also vary from authority to authority. There are top-tier regulators whose excellence lies within their features such as the presence of segregated accounts, the range of protection tools or the investor protection amount itself. Check out a few of the top-tiers in the table below. Most brokers reviewed by BC fall below one of the following four regulators:

Some regulators and their investor protection
FCA in the UK Financial Services Compensation Scheme (FSCS) covers £85,000 of each account's deposits.
SEC, FINRA in the US Securities Investor Protection Corporation (SIPC) covers up to $500,000, including a $250,000 limit for cash.
BaFIN in Germany €100,000 for cash, and €20,000 for securities.
ASIC in Australia No investor protection.

Freetrade is regulated by the top-tier UK regulater, the FCA or Financial Conduct Authority. FCA monitors which firms and individuals are able to enter the financial markets and supervises how firms work and stop those that don't meet their standards.

If a broker goes bankruptcy, eligible customers would also be protected by the FSCS up to £85,000 per claimant per firm. For forex and CFD brokers you're also covered by negative account balance protection. A non-UK citizen is treated the same way as a UK resident in case something goes south.

There are some brokers that provide additional insurance because they have private insurance (e.g.: eToro through Lloyd's, among the US brokers Charles Schwab and Ally have similar setups), which means that you have an extra safety net above the regulatory. It's worth checking it out when you're choosing your broker.

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Freetrade safety
Additional "nice to have" safety features

The subsequent bullet points are rather supplementary, “nice to have” features. Ticking them definitely adds to the safety and legitimacy of an online broker, but not having them is not necessarily a big red flag.

Banking background

Freetrade doesn't have a banking background, which is not crucial, but would mean another guarantee for safety. The reason is that even if it's not required by law that a struggling broker must be saved by its parent bank, in most cases you can count on this happening.

Broker listed on stock exchange

Freetrade is not listed on any stock exchange, hence it's harder to get detailed or any kind of direct information about its financial performance.

Why is being listed on the stock market useful? For two reasons:

  • Listed companies by and large have stringent reporting requirements
  • If something really goes wrong with the broker, you'll be able to tell it from the (rapidly falling) share price of the broker in most cases. In this unlikely scenario, you'll have time to move your funds and securities to another broker.

Annual financial statements on website

Freetrade doesn't publish annual financial statements. These are sort of financial reports, which generally contain information about a brokerage's income, profit and loss, retained earnings and cash flows. Not having these exposed to the public doesn't necessarily mean that a broker is not safe or legit, it's just a factor that we should take into account when choosing where to invest or trade.

Mobile two-step authentication

Freetrade provides two-step authentication when logging in, which makes the platform safer to use.

Broker ownership transparency

Ownership structure of Freetrade is not public, it can't be checked on their website, which leaves some questions open about one's feeling of being up-to-date about the broker.

Broker management transparency

Freetrade has not made their management structure public, which can leave you with a sense of lack considering the broker's transparency and safety.

Broker is audited by the Big Four

Freetrade is audited by one of the so-called Big Four auditors (KPMG, PWC, Deloitte, EY),which guarantees another depth of safety.

Freetrade safety
Bottomline

Now that we have gone through the most frequent and - as we think - most important safety aspects of Freetrade, we hope that you feel armed enough with information for your future decision. In case you're still unsure, use our broker finder and meet the best online broker that suits your needs.

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Author of this article

Bence András Rózsa

Author of this article

Bence’s purpose is to help you to understand the logic behind financial services. In his master’s studies, he specialised in business economy and finance to be able to give you a clear picture of the brokerage world. Having reviewed multiple brokers and robo-advisor services, his goal will always be to guide you in the world of investing as it is.

Bence András Rózsa

Broker Analyst

Bence’s purpose is to help you to understand the logic behind financial services. In his master’s studies, he specialised in business economy and finance to be able to give you a clear picture of the brokerage world. Having reviewed multiple brokers and robo-advisor services, his goal will always be to guide you in the world of investing as it is.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology

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