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What are compensation schemes (FSCS, ICF) in forex regulation?

Compensation schemes reimburse clients if regulated brokers collapse. The UK’s FSCS covers up to £85,000 per person; Cyprus ICF covers €20,000; other regulators vary. These schemes add a safety net beyond segregation, though they don’t protect against trading losses—only broker insolvency. Institutions don’t rely on schemes, but retail traders should. Risks: offshore brokers lack compensation, leaving clients unprotected. Benefits: enhanced trust and regulatory credibility. Before choosing a broker, traders should verify scheme membership via regulator websites. Compensation schemes don’t guarantee profit, but they guarantee fairness if brokers fail, distinguishing real regulation from offshore marketing.