In an effort to drive increased retail investing, the U.K.’s Financial Conduct Authority (FCA) is proposing a series of reforms that aim to ease the constraints on the retail investment business, and facilitate greater risk taking by better-informed investors.
Among other things, the regulator is adopting a less-prescriptive approach to retail investment disclosure — and seeking to make an easier distinction between sophisticated investors, who don’t need many protections, and ordinary retail investors, who do.
“This includes a new way for wealthy and experienced individuals to opt out of retail protections and streamline how firms assess professional investors,” it said.
At the same time, the FCA also issued a discussion paper seeking feedback on other ways to enable increased retail investing activity, and to allow investors to take on more risk.
In that paper, the FCA is looking for input 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,” it said.
That paper is out for comment until March 6, 2026. The consultation on distinguishing between retail and pro investors ends Feb. 2, 2026. And, the new rules on retail disclosure take effect on April 6, 2026, with a transition period (to June 8, 2027).
The FCA said that it has “worked closely” with both the investment industry and consumer groups in developing its proposed policy reforms.
“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,” it said.
And, by drawing clearer lines between retail and professional investors, the FCA said that, “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 of the risks.”
“Today’s measures support investment risk culture right along the spectrum,” said Simon Walls, executive director of markets at the FCA, in a release.
“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,” he added.