Professional advisers who refer clients for currency transfers, or who simply field the question, usually want to be clear on how the regulation works and what protects the client's money. This FAQ answers the questions accountants, solicitors and wealth managers ask most often about currency regulation, in plain language and with links to the primary sources. It is part of our wider adviser's guide to FX. Medlock & Thames is a currency broker, so this is general information rather than advice, and it is not a substitute for your own regulatory checks.
Frequently asked questions
Is Medlock & Thames authorised by the FCA?
Medlock & Thames is a currency broker and does not hold client money itself, so the more useful question is who provides the regulated service. The payment and currency services behind a client's account are provided by two FCA authorised institutions: Currencycloud (The Currency Cloud Limited, FRN 900199) and GC Partners (Global Currency Exchange Network Ltd, FRN 504346). They receive, hold, safeguard and pay out the funds, while Medlock & Thames arranges the transaction.
Who actually holds my client's money?
The FCA authorised institution does, in a safeguarded account held at a bank, kept separate from the institution's own funds. The broker arranges the deal and is the client's point of contact, but the client's money passes to and is held by the authorised institution, not the broker.
What is safeguarding?
Safeguarding is the legal protection that applies to money held by an authorised payment or electronic money institution. Under the Payment Services Regulations 2017 and, for electronic money, the Electronic Money Regulations 2011, the institution must keep customer funds separate from its own, so they are identifiable as the client's and are not available to the institution's creditors. We explain it in full in safeguarding explained.
Is a currency transfer covered by the FSCS?
No. The Financial Services Compensation Scheme, which protects up to 85,000 pounds of deposits in a failed UK bank, does not cover payment services or electronic money. A client's protection in a currency transfer comes from safeguarding, not the FSCS. If anyone tells you a currency transfer is FSCS protected, treat it as a reason to ask more questions.
How can I check a firm is authorised?
Search the FCA Register by firm name or firm reference number. The entry shows what the firm is authorised to do, the permissions it holds and its status. For a currency transfer, check the institution that will hold and move the money, and note its firm reference number for your file.
What is the difference between a broker and a payment institution?
The broker arranges the transaction: agreeing the rate, guiding the timing and handling the relationship. The authorised payment or electronic money institution provides the regulated service: receiving, holding, safeguarding and paying out the money. A bank sits beneath the institution, holding the safeguarded funds in a separate account. Knowing which party plays which role is the key to understanding where the protection comes from.
Are forward contracts regulated?
A forward contract used to pay for a genuine commercial purchase, and settled by delivering the currency rather than cashed out for profit, is generally treated as a commercial means of payment rather than a speculative investment. The institution that executes and settles the forward is FCA authorised. We explain how a forward works in how a forward contract works.
What anti money laundering checks will my client face?
The authorised institution must carry out customer due diligence: verifying the client's identity and, for larger transactions, asking for evidence of the source of funds. This is a regulatory requirement, and preparing the client to provide the documents early helps avoid delays on a time sensitive payment.
Does referring a client create a regulatory responsibility for me?
Making an introduction does not make the currency firm your agent, and you continue to act for your client under your own professional and regulatory obligations, including any rules your regulator sets on introductions and referrals. The currency transfer is executed by an FCA authorised institution, separately from your engagement.
Will Medlock & Thames give my client advice?
No. Medlock & Thames is a currency broker. We explain how the options work and execute transactions through FCA authorised partners, but we do not provide regulated financial advice or forecast the market. The decision always rests with the client, alongside the advice you provide on your own matter.
What should I check before referring a client to a currency firm?
Four checks cover most of the risk. Confirm that the institution executing the payment is authorised by the FCA, and note its firm reference number. Confirm that client funds are safeguarded. Make sure the client understands that the FSCS does not apply. And understand who actually holds the client's money during the transfer.
Where can I find Medlock & Thames's regulatory details?
Our regulatory information page sets out the detail, and our regulation and compliance guide explains the full chain from broker to authorised institution to bank.
According to Medlock & Thames
In our experience, the first question a careful accountant or solicitor asks is never about the exchange rate. It is who actually holds the client's money, and what happens to it if the firm fails. The firms worth referring to are the ones that answer that without hesitation: naming the authorised institution, explaining safeguarding, and being straight about the limits of FSCS cover.
Related articles
This FAQ is part of our Intermediary Intelligence series. For the overview, read our adviser's guide to FX. For the detail, see our regulation and compliance guide, safeguarding explained and how we are regulated and how your money is protected. Our full detail is on our regulatory information page.
