Funds protection ratings

Four categories, two of them called ‘not protected’

The Commission lists four ratings. The weakest is not protected, no segregation. Here, “they provide no protection in the event of insolvency.” These arrangements “are only permitted for non-remote and ancillary remote operators only” – certain operators, such as non-remote or ancillary remote ones. Remote operators holding customer funds cannot use this category.

Next is not protected, segregation of customer funds. The operator keeps client balances in accounts separate from its own trading accounts, but that separation counts for nothing when the company goes under. The segregated funds “would form part of the assets of the business in the event of insolvency” and, as the blunt label says, “provide no protection in the event of insolvency.” This is the minimum floor for all remote operators who hold customer money.

Then come the two categories that offer some structural defence: medium protection and high protection. They differ in what happens to the cash if the lights go out.

What segregation does and does not buy you

Segregation on its own simply means the operator does not pool your deposit with the money it uses to pay wages, suppliers or tax. In normal trading that is a sensible accounting control. But the insolvency rating makes plain that segregated money still belongs to the company. An administrator or liquidator can treat it like any other asset. Customers may receive little in insolvency, and the segregation badge gives no priority.

This catches many players by surprise because the word “segregated” sounds safe. The Commission’s language is deliberately stark: the funds “provide no protection in the event of insolvency.” The requirement to display the rating at the point of deposit is meant to cut through that misunderstanding before a single pound is transferred.

Medium protection and where it stops

Medium protection introduces mechanisms that aim to ring‑fence deposits. These include Quistclose accounts – a trust structure recognised in case law – or insurance arrangements, or something the regulator accepts as equivalent. Customer money is still kept in accounts apart from the business accounts, but the extra step is that the arrangement is designed so the assets “are distributed to customers in the event of insolvency.”

There is a catch, and the Commission states it outright: there is “no absolute guarantee that funds will be protected.” An insurance policy can have exclusions. A Quistclose trust can fail if the legal formalities were not followed. Medium protection improves the odds, but it does not make the balance certain.

High protection and the independent trustee

The strongest category is high protection. Here an independent trust account is set up, legally and practically separate from the operator’s own affairs. The regulator’s description: “Customer funds are held in a formal trust account which is legally and in practice separate from the affairs of the company.” Control sits with an independent trustee or an external auditor, not the operator’s finance team.

Because the trust owns the assets, they should not be reachable by the company’s creditors at all. An insolvency practitioner’s job becomes one of returning money to the beneficial owners – the gamblers – rather than sorting through a scramble for whatever remains. Even here the Commission offers no blanket promise, but the structure gets as close as the current rules allow.

The two places the category has to be stated

An operator that holds customer funds cannot bury the rating. It must appear in the terms and conditions, and it must be shown “at the point at which a customer deposits money.” That means the screen you see when you type in a card number or trigger a bank transfer. A rating that looks like a footnote on a legal page is therefore also a live prompt during the payment flow.

The requirement flows from licence condition 4.2.1, and the Commission’s guidance spells out how to meet it. For a player, the practical result is a small but hard piece of information right when it matters. If the deposit screen says “not protected”, segregation means nothing in a failure. If it says “medium” or “high”, the money has some legal protection, but not a guarantee. The label is the answer to the question every depositor eventually asks: whose pocket does this money sit in if the firm behind the website stops breathing?