Nikhil Rathi, chief executive of the FCA
The Financial Conduct Authority it to review its client categorisation rules to ‘unlock more opportunities for wealthy investors’.
Client categorisation rules are in place to protect retail clients investing in capital markets without imposing ‘undue’ restrictions on professional clients.
The regulator said reviewing the rules will give confidence to firms serving wealthy or very experienced investors to invest in capital markets. It believes that this will boost the competitiveness of UK financial services.
Currently the FCA categorises clients into three main types for investment purposes: retail, professional, and eligible counterparty. These categories determine the level of regulatory protection the client receives. Financial Planners have to classify clients before conducting any investment business.
Some types of complicated and/or high-risk investment products are currently banned from being sold, or marketed, to retail investors.
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 Government has recently been looking for ways to drive money into UK investments as part of its plans to boost UK economic growth.
Plans to drive more UK investment include proposals for the Government to set asset allocation targets for its new pension ‘megafunds’ under the new Pension Schemes Bill currently being debated in Parliament.
