3 Red Flags When Choosing a Broker

3 Red Flags When Choosing a Broker

Imagine, just one click and your trading balance turns into part of the £1.17 billion criminals stolen through payment fraud in the UK. That’s exactly what happened to many back in 2024.

According to UK Finance, reported fraud in Britain’s financial sector hit a record 3.31 million cases in 2024, a 12% increase from the previous year. This is the market where new and experienced traders walk into every day.

Most scams now start online. 70% of authorised push payment fraud cases began on social media last year, and regulators are reacting at scale. In fact, up to 29% of the total fraud losses were attributed to these digital platforms in 2024. In a single quarter, the FCA required 3,273 financial promotions to be amended or withdrawn and issued 528 alerts on unauthorised firms, with 11% involving clone scams.

Choosing the right broker is therefore about protection as much as performance. This guide sets out three red flags that separate a risky broker from a reliable one and gives clear, practical steps you can use to protect your money before you place a single trade.

Red Flag #1: No Proper Regulation

When a broker is not authorised to offer the product you plan to use, you lose the basic safeguards that protect your money. The simplest way to avoid this is to verify the firm on the official regulator’s register before you open or fund an account, and make sure the permissions listed match the service being sold. If the firm is missing, or the details do not line up, stop there and do not deposit.

It is even better if the broker participates in a recognised investor compensation scheme or carries additional insurance for client funds. These protections cover firm failure or custody risk rather than trading losses, but they add an extra layer of safety.

The risk is not theoretical. In the final quarter of 2024, the Financial Conduct Authority issued 584 alerts about unauthorised firms and individuals, with 11 percent involving clone scams. In the same quarter it forced 3,697 financial promotions to be amended or withdrawn. A recent case shows the cost when people trust an unauthorised operator. In May 2024, the FCA secured a six-year sentence against Guy Flintham after he defrauded around 240 investors of approximately £19 million through an unauthorised investment scheme.

The takeaway is simple. Verify first and fund later. Use the official register to confirm the firm exists, check that its permissions cover the instrument you intend to trade, and only use the contact details shown on the register. If any single detail is off, treat it as a hard stop and choose a different provider.

Red Flag #2: Hidden Fees and Unrealistic Offers

Low spread headlines are meaningless if the broker recovers its margins elsewhere. Watch for vague fees withdrawal or inactivity charges that only appear deep in the terms, ads that promise “risk-free trading”, bonuses to trade more, or guaranteed returns.

UK rules in particular, require promotions to be fair, clear and not misleading, and for contracts for difference providers there is an explicit ban on monetary and non-monetary inducements that push retail clients to trade.

Regulators’ case studies repeatedly flag unclear fee claims, such as promotions using “no win no fee” without explaining what the fee actually is. And when marketers dangle unrealistic payoffs, the Advertising Standards Authority has been quick to act. In January 2025, it upheld a ruling against an investment ad that trumpeted returns of 10 to 30% without robust evidence, reinforcing that big headline numbers without context mislead consumers.

Be wary of any promotion that implies easy or guaranteed profits or tries to nudge you into trading with perks that reputable firms are not allowed to offer to retail clients. If the costs are hard to find or the offer sounds effortless, pick a different provider.

Red Flag #3: Lack of Transparency and Poor Support

When a broker makes it hard to find who owns the company, where client money is held, how complaints are handled, you have a service problem disguised as a website design choice.

Across the EU, an ESMA mystery shopping exercise on marketing communications from 2023 found that risk information was frequently downplayed in how it was presented, with the most common problems being smaller font size at 60%, different colour at 14%, or risk text tucked into footnotes or separate layers at 13% each.

A real world example of what poor support and communication can enable came in Australia, where the Federal Court found that two CFD brands engaged in systemic unconscionable conduct that included high pressure tactics and misleading communications, with customer losses of more than AUD 83 million.

Remember to look for clear ownership and a physical address, a published complaints process, an execution policy and a client agreement you can actually read.

You can also try the support channels at different times of day and ask pointed questions about withdrawals, account closures and negative balance protection. If the contact routes are hard to find, the answers are vague, or the risk and cost information is visually deemphasised compared with the sales pitch, treat that as a hard stop and move on.

So, How to Spot a Trustworthy Broker?

A reliable broker leaves a paper trail you can verify. Start with regulation. Look the firm up on the official register of a respected authority they claim, such as the FCA, ASIC or CySEC and make sure the permissions match the products you plan to use. Then check that the contact details on the register match the ones on the broker’s website.

Next, check if the costs are transparent. If the numbers are hard to find or the headline claim does not match the small print, that is a warning sign.

You can also find transparent ownership information and a clear support process. Try their chat and email support at different times and keep an eye on how quickly and clearly the team responds.’

Here’s a quick checklist

• Verify the licence on an official register and match the contact details.
• Make sure costs advertised on the platform and website are transparent.
• Test support and the complaints process before you deposit.

Ultima Markets: The Broker You Can Trust

Ultima Markets UK Ltd meets the above checklist in practice. As a broker regulated by the Financial Conduct Authority, Ultima Markets UK Ltd’s status and licence are available for verification on the FCA Financial Services Register.

Ultima Markets is currently developing a dedicated website for UK clients and expects to onboard UK clients under FCA regulations in 2026.

UM publishes fees and key terms in plain language and makes ownership, contact routes, and the support is easy to find. This level of transparency means it avoids red flags and sits in the camp of brokers you can trust.