Investing term
What is Protection cap?
The maximum amount the investor-protection scheme will reimburse per client per broker failure.
A protection cap is the maximum an investor-protection scheme will reimburse per client if a regulated broker fails — money above the cap generally isn't covered. Every scheme has one, and it's set per client, per institution, so the limit applies to your total eligible assets at that one broker.
Knowing the cap matters most if you hold large balances. If your assets at a single covered broker exceed the cap, the excess sits outside the protected limit should the firm collapse. A common way to keep more of your money protected is to spread it across more than one covered institution, so each holding stays within its own cap. The specific cap and rules vary widely by country and scheme, so check the limit that applies to you.
The protection scheme reimburses only up to a cap per broker. With $150k at one broker and a $100k cap, $50k sits unprotected — spreading across covered brokers keeps more within it.
For example
With a $100,000 cap and $150,000 at one broker, $50,000 sits above the protected limit — spreading across two covered brokers would keep it all within the caps.
Learn it by doing
That's Protection cap in theory — it clicks when you use it. Practise it hands-on in a free, interactive lesson (Stage 9, Fees, Scams & Protecting Your Money).
Try the free lesson →Why it matters to you
The protection cap matters because it defines the actual limit of your safety net — and it's easy to assume a scheme covers everything when it doesn't. For anyone with substantial savings at a single broker, the amount above the cap is genuinely at risk if the firm fails. Knowing your scheme's cap, and spreading larger balances across covered institutions to stay within it, is a simple way to keep more of your money inside the protected zone.
⚠ Holding more than the cap at one broker
If your balance at a single covered broker exceeds the protection cap, the excess isn't protected should the firm fail. Investors often assume the scheme covers their whole balance, whatever its size. For large holdings, check the cap and consider spreading assets across multiple covered institutions so each stays within its own protected limit.