Freetrade – The Key Points
Positives:
- Unlike some of their competitors, Freetrade do not offer or promote riskier investments such as CFDs or cryptocurrency.
- Customer deposits are protected under the Financial Services Compensation Scheme.
- Freetrade are fully regulated in the UK by the Financial Conduct Authority.
Potential Concerns:
- Freetrade are not yet profitable, having made a loss of £18 million in 2021. However, they are still well funded.
What Is Freetrade?
Freetrade is a smartphone app based trading app that allows users to perform trades of stocks, shares and ETFs for free. Launched in 2018 in the UK, Freetrade claimed over 1 million users were active on their app in 2021, with over £1 billion in value traded via them in quarter 1 2021.
Is Freetrade Safe – The Details
Regulation:
Freetrade are fully regulated as a company that allows users to invest, and who holds customer funds, by the Financial Conduct Authority (FCA) in the UK.
Protection/Insurances:
All funds deposited by customers into their Freetrade account are protected under the Financial Services Compensation Scheme (FSCS) up to a maximum of £85,000 per customer, in the event that the company becomes insolvent.
Freetrade also segregate customer funds from their company funds, so the customer money can never be used to cover business expenses.
Investment Risk:
Freetrade is an investment app, and whether it is safe or not, depends on how you look at it. As a platform, Freetrade is well regulated, and appears to have a stable startup business, so it appears at this time to be safe to use them to invest.
However, investment in general is risky, and the main area of concern would be that Freetrade offers a very easy to use and cheap way for people to invest. This means that it may appeal to beginner investors. However, beginner investors may be less aware of the general risks of trading stocks and shares, and that there is always the risk that you could lose all of the money you put in.
In Freetrade’s favour is that they do not currently offer more risky investments such as CFDs or cryptocurrency.
Company:
As a relatively new startup, Freetrade are not yet profitable. Indeed, the company made a pre-tax loss of £18 million in the year up to September 2021. However, they continue to be well funded, having received a £30 million investment/loan in 2022.
Data Security:
Freetrade do only have access to the data you share with them i.e. within your Freetrade account. They state that they use high level encryption of data and follow all GDPR rules.
Resources:
Trustpilot
https://www.trustpilot.com/review/freetrade.io
https://www.reddit.com/r/FreetradeApp/
Is Freetrade Legit?
Freetrade is a relatively new product but they have built up all fo the safeguards you would expect from an investment platform, such as FCA regulation and FSCS deposit protection. Users should note that the real risk, as with any investment product, is that you can lose money, so users should educate themselves and be aware of the risks before starting to trade.