UK FCA Proposes Flexible Investor Classification Framework to Enhance Market Efficiency
The Financial Conduct Authority unveiled measures Monday to streamline investor classifications, allowing firms greater latitude when servicing professional clients. High-net-worth individuals may now opt out of retail protections through a simplified pathway, provided firms obtain informed consent.
Regulators eliminated what they termed arbitrary classification tests, shifting responsibility to financial institutions for verifying client qualifications. The revised framework maintains stringent professional investor thresholds to ensure only those with substantial experience or risk capacity bypass consumer safeguards.
Simon Walls, FCA Markets Executive Director, framed the changes as balancing investor protection with market fluidity: "These adjustments cultivate appropriate risk culture across the spectrum while ensuring retail participants receive comprehensible product information."
