Robinhood UK vs Freetrade and Trading 212: Which App Protects UK Investors Best?

When people download a trading app, they usually think about the fun stuff: commission-free trades, fractional shares, maybe even a slick dark mode. What gets less attention is the boring but essential question: how safe is your money once it’s inside the app?

For UK investors, that question looks very different depending on whether you use Freetrade, Trading 212, or the freshly re-launched Robinhood UK. The differences aren’t about branding or user experience; they’re about who’s legally responsible for your cash if something goes wrong.

🔎 The Quick Comparison

1. FSCS vs SIPC: Whose Safety Net Do You Want?

With Freetrade and Trading 212, your first £85,000 sits under the protection of the UK’s Financial Services Compensation Scheme (FSCS). If the broker collapsed, FSCS steps in. It’s simple, local, and relatively fast.

With Robinhood UK, there is no FSCS. Instead, you’re depending on U.S. insurance: SIPC (covering $500k of securities) and FDIC (covering $250k of cash). Good protections, but written into American law for American investors. If you live in London, you’d be filing claims through New York.

It’s like buying travel insurance that only pays out if you make the claim in another country, in another currency. Doable, but awkward.

2. Custody: Where Do Your Shares Actually Live?

• Trading 212 → Partners with BNY Mellon and Interactive Brokers. Assets are held in segregated accounts, ring-fenced from Trading 212 itself.

• Freetrade → Keeps UK shares in a non-trading subsidiary (Freetrade Nominees Ltd), and U.S. shares through a regulated custodian.

• Robinhood UK → Outsources everything to Robinhood Securities LLC in the U.S.

In practice, this means that if you own a Tesco share through Freetrade, it is held in the UK settlement system. Own the same share through Robinhood UK, and it’s custodied thousands of miles away under a different regulator.

3. Tax Wrappers: Playing by UK Rules

ISAs and SIPPs are the crown jewels of UK investing. Both Freetrade and Trading 212 let you invest in them. Robinhood UK doesn’t. That means every gain and dividend is fully taxable.

It’s like going to a football match where everyone else gets free season tickets, but you still pay full price at the gate.

4. Currency: GBP or USD?

Freetrade and Trading 212 allow you to keep your cash in pounds. You only see FX fees when you buy U.S. stocks.

Robinhood UK automatically converts every deposit into dollars. That means even if you only want to buy U.S. stocks, you’ve added an extra layer of risk: the GBP/USD exchange rate. If the pound strengthens while your shares rise, the currency cancels out your gains.

In other words, Robinhood makes you a forex trader whether you wanted to be one or not.

5. Financial Stability: The Parent Test

• Trading 212 has been profitable for years, managing approximately £25 billion of client assets.

• Freetrade started as a scrappy startup but now has the backing of IG Group, a FTSE-250 giant.

• Robinhood UK is backed by its American parent, Robinhood Markets Inc. That parent is big and listed, but the UK arm is new, untested, and entirely reliant on U.S. structures.

The Bottom Line

• ✅ Freetrade and Trading 212 → Assets stay under UK rules, with FSCS protection and access to ISAs/SIPPs.

  • Get free shares in Freetrade

  • Get free shares in Trading 212

• ⚠️ Robinhood UK → Assets move offshore, no FSCS, no tax wrappers, and constant FX risk.

Final thought: Robinhood is a big name in the U.S., but in the UK, it’s more like an American tourist, loud, confident, and not entirely familiar with the local rules. For UK 9-5 investors, the safer choice remains the homegrown brokers that actually play by UK protections.

Disclaimer: This publication is for general information and educational purposes only and should not be taken as investment advice. It does not take into account your individual circumstances or objectives. Nothing here constitutes a recommendation to buy, sell, or hold any investment. Past performance is not a reliable indicator of future results. Always do your own research or consult a qualified financial adviser before making investment decisions. Capital is at risk.