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The Financial Conduct Authority (FCA) has set out a suite of measures today to empower retail investment, reinforce wholesale markets and maintain the UK’s position as a world-leading financial centre.
With new rules for investment product information the FCA is playing its part to build a stronger investment culture, supporting firms to innovate and make investing more engaging for consumers. And the FCA is seeking views to make sure regulation supports consumers to invest with confidence.
Proposals to enhance how firms classify their clients will give confidence to firms when they deal with professional investors, drawing a line so wholesale markets can remain agile and innovative.
The regulator has worked closely with industry and consumer groups to deliver practical policy that moves the dial on risk.
Simon Walls, executive director of markets at the FCA, said:
“Today’s measures support investment risk culture right along the spectrum. They ensure that firms can compete to give retail customers material that informs and engages them. They also draw a brighter line for professional markets, defined by contracting parties, informed consent, and regulation that is proportionate to that.”
Making it easier for consumers to understand investments
In retail investment disclosures the FCA will make a decisive shift away from prescriptive and complex templates that consumers don’t find useful. This gives firms more freedom to put the consumer first, innovate and help their customers understand potential returns as well as costs and risks.
The FCA is also seeking views on how longer-term regulation can keep up with the evolving retail investment landscape and help shift the dial on risk appetite, to give consumers confidence to access investments that meet their needs and benefit from the potential returns.
Distinguishing between professional and retail
The FCA is setting a clearer boundary between retail and professional investors, allowing firms to deal with professional investors with confidence operating outside retail regulations. This will free up firms to innovate and offer a more diverse range of products to truly experienced clients with the resources to bear more the risks.
The threshold to qualify as a professional investor will remain high, so only those with experience, advice, or the ability to bear risk are taken out of retail protections, such as the Consumer Duty, that they don’t need. High standards in classification means ensures that wholesale regulation remains proportionate and firms are freed from unnecessary guardrails.
Proposals remove some arbitrary tests and give firms more responsibility to get it right. This includes a new way for wealthy and experienced individuals to opt out of retail protections and streamline how firms assess professional investors.
Notes to editors:
- Copies of the papers are available on request from the press office.
- A background/off-record media briefing will take place remotely today at 11am to discuss the package in more detail. Please email the press office if you would like to attend.
- Rules for targeted support will be set out in the coming days. Elsewhere, the FCA supports the industry-led campaign that will help to explain the benefits of investing.
- Consultation paper on client categorisation and conflicts of interest rules
- These proposals would allow firms to confidently operate with professional clients who don’t need retail protections. However, the regime only works if firms can demonstrate that their clients genuinely meet the threshold of a professional client and the clients give informed consent. The FCA has recently published findings from its supervisory work to ensure firms do this well, including:
- A warning for investors in contracts for difference.
- A review of client categorisation in corporate finance firms.
- The FCA is also streamlining the rulebook, removing duplications and simplifying requirements.
- Discussion paper on expanding consumer access to investments
- This paper seeks views from industry on what else can be done to ensure regulations help consumers take informed risks.
- Policy statement on consumer composite investments
- New rules to replace EU-derived PRIIPs and UCITS disclosure requirements for packaged investment products with a more flexible regime for the UK built on the Consumer Duty.
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Statement on Consumer Duty expectations for firms working together to manufacture products or services
- Updated expectations to help firms interpret the Consumer Duty where they work together to create products and services.
- The FCA enables a fair and thriving financial services market for the good of consumers and the economy. Find out more about the FCA.
Enquiries
Press: 020 7066 3232 / Frederick.Stevens@fca.org.uk
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