The FCA is planning to review its client categorisation rules as part of a raft of measures to attract investment and support economic growth.
The review follows landmark changes to the listings regime last year to facilitate ease of transactions.
Client categorisation rules exist to protect retail clients investing in capital markets imposing unwarranted restrictions on professional clients. The FCA’s latest initiative is to ensure the rules are proportionate for wealthy and experienced investors.
The reform builds on 10 initiatives the FCA has delivered this year to support growth, with around 50 to be completed by the end of the year.
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 Personal Investment Management and Financial Advice Association welcomed the review.
Simon Harrington, head of public affairs at PIMFA, said: “In a recent report we published alongside UK Finance and KPMG, insights from senior stakeholders across the private banking and wealth management sector highlighted the need for a review of retail client classifications, to facilitate greater investment opportunities and risk diversification for their customers. Some of the stakeholders we spoke with view the current rules as unduly onerous compared to other European jurisdictions.
“Introducing a semi-professional client category in the UK is one idea our report raises, with clear eligibility criteria – such as having previously received financial advice and/or meeting a minimum net worth threshold – ensuring that safeguards remain in place.”
