The Financial Conduct Authority (FCA) is planning to review its client categorisation rules to unlock more opportunities for wealthy investors and support capital markets, driving economic growth.  

The reform will build on 10 initiatives the FCA has already delivered since January to support growth, with around 50 to be completed by the end of the year. 

Client categorisation rules protect retail clients investing in capital markets, without imposing undue restrictions on professional clients. Reviewing the rules will ensure that expectations remain proportionate when dealing with wealthy or very experienced investors. This will give confidence to firms and support investment in capital markets, boosting the competitiveness of financial services.     

Nikhil Rathi, Chief Executive of the FCA, said: “Modernising the client classification regime will provide greater clarity about the rules and protections applying to different customer groups, particularly for wholesale firms. We want to rebalance risk to support growth and competitiveness, which is at the heart of our strategy. We are delivering a large number of reforms to support a bolder risk appetite, making it easier for companies to raise capital and reimagining financial advice and guidance to boost investment.”    

The FCA’s completed growth initiatives include: 

• More flexible regulation: Set out steps to improve access to mortgages,  reminding lenders of the flexibility of its interest rate stress testing rules to help more people onto the housing ladder. More changes are to come to improve access and flexibility for borrowers.  

• Unlocking investment: A pioneering new private stock market, PISCES, making it easier and quicker to trade in private shares. This gives investors the opportunity to invest in high-growth private companies that are not usually available until they are publicly listed. 

• Accelerating innovation: A new Digital Securities Sandbox, launched in partnership with the Bank of England, giving firms the opportunity to explore new technologies. 

• Helping firms set up and grow: Extra support for firms seeking regulatory approval through the extension of the pre-application support service to all wholesale, payments and cryptoassets firms. This will encourage firms in these sectors to set up in the UK to fuel growth, exports and job creation, while maintaining standards. In the last year alone, the FCA has supported 80 firms via pre-application meetings. 

• Promoting the UK: Established a presence in the US and Asia-Pacific to help the export of UK financial services and attract more inward investment to our shores. 

Work is well underway delivering other growth initiatives, such as supporting capital markets by making changes to prospectus rules and getting rid of unnecessary data reporting to ease the regulatory burden for firms. The FCA is also simplifying and consolidating capital rules for investment firms, which would cut the volume of legal text by 70%.