Practical, UK-focused guidance on choosing and using business bank accounts, client accounts and FSCS coverage for insurance brokers, with fees, features, onboarding and switching tips.
Getting your banking foundations right
Running a brokerage involves handling client premiums, insurer remittances and your own working capital. The right business bank account helps you separate these flows clearly, meet regulatory expectations and keep day-to-day operations smooth. For limited companies, a dedicated business account is not optional because the company is a distinct legal entity. For sole traders, it is strongly recommended to keep bookkeeping simple, strengthen your professional image and build a business credit profile.
You will be choosing between high street banks and digital-first providers. Each offers a different mix of fees, features and protections. Understanding deposit protection, especially FSCS coverage, is essential when you hold meaningful balances such as commission receipts or insurer funds awaiting settlement. If you handle client money directly, a specialist client or trust account may also be needed to demonstrate proper segregation.
Good banking hygiene protects your clients, your reputation and your margins.
A thoughtful approach now can reduce admin, improve cashflow and support growth later.
Who benefits from this guide
If you are a UK insurance broker - whether a start-up, an appointed representative, a growing provincial firm or a niche specialist - this guide is for you. We focus on practical decisions that affect compliance, deposit safety, fees and cashflow so you can choose banking that fits how your brokerage actually operates.
What you need from a broker-friendly bank
A business account should separate your firm’s money from personal finances and, where relevant, from client funds. Limited companies are legally required to bank separately. Sole traders are not compelled to, but a dedicated account supports clearer records for tax, professional presentation to insurers and lenders, and a stronger case for future overdrafts or loans.
Most business accounts from UK banks are protected by the Financial Services Compensation Scheme up to £120,000 per banking group for eligible deposits. Sole traders are a single legal person, so balances with the same provider usually aggregate across personal and business. Limited companies get a separate limit distinct from the owners’ personal protection. Some app-based providers operate as e-money institutions rather than banks; funds are safeguarded under e-money rules but do not have FSCS protection.
If you hold premiums or claims monies, a bank client or trust account can ring-fence these funds from your own working capital and provide the audit trail that insurers and regulators expect.
How to set up smoothly and stay compliant
Gather your documents before applying: proof of identity and address for directors and signatories, Companies House details for companies, and a clear description of ownership and activities. Banks will run KYC and anti-money-laundering checks, which can be more detailed for intermediaries. Many providers offer fully online onboarding with secure document upload, making the process far faster than it used to be.
Think through your operating model. If you mainly receive electronic transfers from insurers and clients, a digital-first account with low or no monthly fees may keep costs lean. If you need branches, cash or cheque handling, or a fuller relationship with lending and merchant services, a high street bank can be a better fit. For client money, ask your bank for a dedicated client account, confirm how it is labelled, and understand the statements and reporting you will receive.
Build a banking footprint with the future in mind. Track turnover and conduct in your business account to support overdraft eligibility. If cash balances will exceed protection limits, consider diversifying across unrelated banking groups, and review exposure when market mergers change licensing structures.
Why careful banking choices matter for brokers
Decisions about accounts and providers affect regulatory confidence, client trust and financial resilience. Proper separation helps demonstrate good governance to the FCA and insurers. FSCS protection - where applicable - reduces the impact if a bank fails, and knowing the difference between a bank and an e-money institution helps you judge counterparty risk.
Fees may look small individually but can materially erode smaller firms’ commission income. Selecting tariffs aligned with your transaction profile prevents surprises. Integrated tools save admin time and support Making Tax Digital record-keeping, especially when reconciling multiple insurer statements and bordereaux. Access to overdrafts or working capital can smooth the timing gap between expenses and commission receipts. Finally, switching through the Current Account Switch Service can improve value without disrupting incoming or outgoing payments.
High street or digital-first? A quick comparison
| Provider type | FSCS coverage | Onboarding speed | Cash and cheques | Integrations and apps | Lending options |
|---|---|---|---|---|---|
| High street bank | Typically FSCS eligible up to £120,000 per group | Moderate | Strong branch network | Good, varies by bank | Broad range including overdrafts |
| Digital-first provider | Some are FSCS banks, others are e-money with safeguarding | Often very fast | Limited or none | Rich mobile features and invoicing | Varies - some limited lending |
Match the account to how your brokerage actually banks - not how generic SMEs bank.
The upsides and trade-offs
| Pros | Cons |
|---|---|
| Clear separation for compliance and governance | Fees can add up, especially for cash and cheques |
| FSCS protection with licensed banks up to £120,000 per group | Some app providers are e-money only - no FSCS |
| Client accounts help ring-fence premiums and claims funds | Client accounts may pay low or no interest |
| Integrated tools reduce admin and support MTD | Digital-only models may lack branch or cash services |
| Track record supports overdrafts and future funding | Onboarding can be slower for complex firms |
Pitfalls to avoid
Balance safety and convenience. If you hold meaningful balances, confirm the provider’s licence and whether your deposits are FSCS protected, then consider spreading funds across unrelated banking groups. If your firm handles client money, do not mix it with operational funds - use a formal client or trust account with clear labelling and audit trails.
Scrutinise fee schedules. Cash and cheque handling can be costly, while some digital accounts keep online payments free. Introductory free banking periods are helpful but time-limited, so check the tariff after the promotion. Confirm international payments, card fees and any charges for faster payments if those are key to your model. Finally, prepare for onboarding by documenting ownership, sources of funds and your control environment, especially if you place business internationally or have complex structures.
Sensible alternatives if a main account does not fit
- Open a secondary account with a different banking group to diversify FSCS exposure and segregate working capital.
- Use a high street bank for client accounts and a digital provider for day-to-day operations, with controls for inter-account transfers.
- Maintain an e-money account for faster onboarding and tools, alongside an FSCS-covered bank account for larger balances.
- Add a specialist foreign currency account if you place risks or pay fees in other currencies.
- Consider merchant acquiring solutions or payment gateways integrated with your bank for card-taking needs.
Common questions brokers ask
Do I legally need a business account as a broker?
Limited companies must keep finances separate and should use a business account. Sole traders are not legally required to, but a dedicated account makes bookkeeping and tax simpler and looks more professional.
Is my brokerage’s money protected by FSCS?
If you bank with a licensed UK bank, eligible business deposits are typically protected up to £120,000 per banking group. Sole traders’ personal and business balances with the same provider usually aggregate. Always check the provider’s licence status.
What is the difference between a business account and a client account?
A business account holds your firm’s money. A client or trust account ring-fences funds you hold on behalf of clients, such as premiums or claims monies. It provides separation, control and audit trails.
Will a digital account suit a regulated brokerage?
Often yes if you operate electronically and rarely handle cash. Verify FSCS coverage, review fee schedules and confirm that you can open a properly designated client account if you hold client money.
How do fees typically work?
Expect a monthly fee plus charges for certain transactions. Cash and cheque deposits tend to cost more. Many banks offer introductory free banking for new or switching customers, and digital providers may keep online payments low-cost.
Next steps you can take today
- Map your cashflows: operational, client money and insurer settlements.
- Confirm your likely balance levels and FSCS needs.
- Shortlist providers based on licence type, fees and tools.
- Prepare onboarding documents to avoid delays.
Small, thoughtful decisions now can prevent bigger headaches later.
How Switcha can help
Switcha will connect you with the best options for what you are looking for. We compare features, fees and protection across providers so you can choose with confidence. Our guidance stays impartial and practical, helping you balance everyday usability with regulatory expectations and the long-term needs of your brokerage.
Important note
This guide provides general information for UK insurance brokers and is not financial, legal or regulatory advice. Always check the latest terms with your bank, verify licence status and speak to a qualified adviser about client money and compliance obligations.
Get smarter with your money
Join thousands of people in the UK who are taking control of their financial future
FAQs
Common questions about managing your personal finances
Begin by tracking every expense for one month. Use an app or spreadsheet. No judgment. Just observe your spending patterns.
Cancel unused subscriptions. Cook at home. Compare utility providers. Small changes add up quickly.
Aim for 20% of your income. Start smaller if needed. Consistency matters more than the amount.
Choose reputable apps with strong security. Read reviews. Check privacy policies. Protect your financial data.
Pay bills on time. Keep credit card balances low. Check your credit report annually. Be patient.
Still have questions?
Our team is ready to help you navigate your financial journey
More financial insights
Explore our latest articles on personal finance and money management
