The FCA is proposing significant changes to the way firms classify clients as either retail or professional, alongside streamlining conflict of interest rules.
The aim is to give firms more flexibility to work with wealthy or sophisticated clients who may not need the full set of protections that apply to retail investors, while also strengthening safeguards that prevent consumers being pushed into giving up protections they still need.
One proposal is to allow individuals with more than £10 million in investable assets to opt out of retail protections and be treated as professional clients.
The FCA believes that people at this level of wealth are more likely to have access to financial advice and specialist support, and are more financially resilient if anything goes wrong.
For clients below the £10 million threshold, firms would still need to assess whether they have the knowledge, experience and financial resilience to understand and bear the risks of investing without retail protections.
However, this assessment will be reframed around a set of “relevant factors” such as investment experience, ability to bear losses and understanding of risk. Crucially, firms won’t be able to rely solely on self-certification, or online tick-box forms.
Alongside this, the FCA is proposing to remove the existing “quantitative test” used for elective professional status, such as requiring clients to have traded ten times per quarter. The regulator said this rigid criteria no longer reflects how experienced investors behave, and that they have in some cases been misused to push unsuitable clients into higher-risk products.
The FCA has also announced plans for stronger rules around informed consent. Firms will have to explain clearly what protections clients are giving up, including access to certain redress schemes, and must give clients enough time and information to make a considered decision.
Separately, the conflicts of interest rulebook will be simplified to remove duplication and outdated EU rules, but the bulk of firms’ duties will remain unchanged.
Winston Ruddick, senior consultant in the financial planning team at Broadstone, said: “The FCA is right to draw a clearer boundary between retail and professional investors.
“Ensuring that experienced or well-advised clients can access a broader range of products without unnecessary restrictions helps maintain the UK’s competitiveness, while preserving vital protections for those who need them most.”
The FCA is seeking feedback on the proposals by 2 February 2026.
