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Regulated vs unregulated

Published · updated · 4 min read

Checked by the The Proofmark editorial team against our methodology before publishing

Regulated vs unregulated

A regulated firm holds a licence from a financial authority and is bound by rules that authority can enforce. An unregulated firm holds no such licence. Most avoidable investment losses happen in the gap between the two — usually because someone checked, got an answer, and misread what the answer meant.

Three different answers, and only one of them is good

When you look a company up on a regulator's register, you can get three results. They are not shades of the same thing.

Authorised Found, with permission for the exact thing being sold Compensation scheme and ombudsman apply Still check it is really them On the warning list The regulator has already published a warning No compensation scheme, no ombudsman Decided. Walk away. Not found No entry under that name at all Means only that: no entry. Not a clearance. The most misread answer

Reconstruction · not a screenshot

The third box is where people get hurt. "I looked, and there was nothing bad about them" is not what an empty search result says. The FCA states it in its own words on the warning list page: "But if a firm isn't on the list, it may still be unauthorised or be a scam. Unauthorised firms often change their names, and we may not be aware of it yet."

Names are cheap. In the campaign we documented around the name Quantum AI, the FCA's register carries five separate unauthorised-firm entries built from the same three words — Quantum AI, Quantum AI Miners, Quantum Asset AI, Quantum Open AI, quantum-trading-ai.net. Each time one name is burned, the next one costs nothing.

What a licence actually buys you

Not profit, and not honesty. Authorised firms are fined and banned — that is what supervision looks like when it is working. What the licence changes is the floor under you when something goes wrong:

  • Your money is supposed to be kept separate from the firm's own money, so that if the firm fails, its creditors cannot reach it.
  • A compensation scheme covers you, up to a limit. In the UK the FSCS covers investments up to £85,000 per person per firm where the firm failed after 1 April 2019, and bank and building society deposits up to £120,000 where the firm failed after 30 November 2025.
  • A complaint has somewhere to go that is not a court — an ombudsman who can order redress.
  • Someone has the legal power to look at the books.

Every one of those is attached to authorisation, and to nothing else. The FCA spells out the consequence in the standard wording of its own clone warnings: "If you deal with this firm, you won't have access to the Financial Ombudsman Service... You also won't be protected by the Financial Services Compensation Scheme."

The offshore licence question

A great many platforms do hold a licence, and it is a real document. The question is what stands behind it.

The honest test is not "are they licensed" but: if this firm fails owing me money, which scheme pays me, and up to what? If there is no answer to that, the licence is a certificate, not a protection.

One more thing worth knowing: a large brand often runs several legal entities in several countries, and the one you are actually signed up to may not be the one the marketing implies. The entity name in your own account documents is the one to look up.

How to check so the answer means something

  1. Go to the register directly — type the regulator's address yourself. Never follow a link, a badge or a licence number shown on the firm's own site.
  2. Match the exact legal entity name from your account documents, not the trading name on the advert.
  3. Check what the permission covers. A firm can be authorised for something much narrower than what it is selling you.
  4. Use only the contact details the register holds. This is the step that defeats a clone firm, and it is the one people skip.
  5. Then search the warning lists — and remember what an empty result does and does not mean.

A note on wording, because it matters: "not listed on the FCA register" is a fact you can state. "Not allowed to operate" is a legal conclusion, and it is not yours or ours to draw. We hold ourselves to that line in everything we publish, and it is worth holding to it yourself before you accuse a company of anything.

Not sure how to read what you found? Send it to us — we will look at it with you, free.

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Clone firm

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Terms used in this article

📖 Deepfake 📖 Clone firm

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