The FCA has set out a suite of measures to empower retail investment, reinforce wholesale markets and maintain the UK’s position as a world-leading financial centre.
The Financial Conduct Authority said it is playing its part to build a stronger investment culture, supporting firms to innovate and make investing more engaging for consumers.
The FCA is seeking views to make sure “regulation supports consumers to invest with confidence”.
The city watchdog believes that these proposals will enhance how firms classify its clients, giving confidence to businesses who deal with professional investors.
In retail investment disclosures “the FCA will make a decisive shift away from prescriptive and complex templates that consumers don’t find useful”.
This will give firms more freedom to put the consumer first.
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.
This is in order to give consumers confidence to access investments that meet their needs and benefit from the potential returns.
This will set a clearer boundary between retail and professional investors, giving firms the power to deal with professional investors with confidence operating outside retail regulations.
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.
Proposals also remove some “arbitrary tests and give firms more responsibility”. This offers a new way for wealthy and experienced individuals to opt out of retail protections and “streamline how firms assess professional investors”.
FCA executive director of markets Simon Walls 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.”
Commenting on the FCA’s announcement, Barry Cook, interim proposition director at Quilter, welcomed the regulator’s “policy blitz” to improve the UK’s investment culture, noting that the more technical reforms “should deliver meaningful benefits for both consumers and providers”.
He said the FCA was right to tackle “lengthy, jargon-heavy documents that discourage engagement”, adding that greater flexibility to produce clearer product summaries “should improve customer understanding and reward firms that prioritise clarity and customer outcomes”.
Cook highlighted the importance of recognising that professional and ultra-high-net-worth clients “require different protections than retail investors”, particularly as policymakers look to widen access to private markets.
Updating investor definitions and creating more bespoke regulation would, he said, “help people take positive action in their investment journey”.
He also welcomed the FCA’s attempt to challenge perceptions of risk, arguing that too many people remain in cash or invest too cautiously, meaning “wealth creation is being left on the table”.