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.