Investor Compensation Scheme

An investor compensation scheme is a regulator-backed fund that reimburses clients, up to a set limit, if a licensed broker becomes insolvent and can't return segregated client funds — the UK's FSCS and Cyprus's ICF are two well-known examples. It's a backstop for broker failure specifically, not a guarantee against trading losses. Coverage limits and eligibility vary significantly by jurisdiction, so it's worth checking the specific scheme (and cap) tied to a broker's actual license rather than assuming all "regulated" brokers offer equivalent protection.