The Financial Conduct Authority on Monday set out new measures to build a ‘stronger investment culture’ in the UK, ‘supporting firms to innovate and make investing more engaging for consumers.’
The UK’s financial regulator said it is also seeking views to make sure regulation supports consumers to invest with confidence.
Simon Walls, executive director of markets at the FCA, said: ‘Today’s measures support investment risk culture right along the spectrum. 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.’
In retail investment disclosures the FCA said it 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,’ the regulator said.
The FCA said it is setting a clearer boundary between retail and professional investors, allowing firms to deal with professional investors with ‘confidence’ operating outside retail regulations.
‘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,’ it said.
The threshold to qualify as a professional investor will ‘remain high, so only those with experience, advice, or the ability to bear risk are taken out of retail protections,’ the FCA added.
‘High standards in classification means ensures that wholesale regulation remains proportionate and firms are freed from unnecessary guardrails,’ the regulator said.
Proposals include a new way for wealthy and experienced individuals to opt out of retail protections and streamline how firms assess professional investors.
Jonathan Parry, a partner in the capital markets group of global law firm White & Case LLP, commented: ‘This is another step in the right direction from the FCA that will add to the growing momentum in London’s IPO market, which is benefitting from the regulatory changes already introduced by both the FCA and the LSE that have helped levelled the playing field with other global listing venues.’
‘Fostering a stronger investment culture’ and ‘boosting’ retail investor participation in the stock market will ‘strengthen London’s competitiveness by increasing liquidity, improving access to capital for companies and bringing the UK more in line with other jurisdictions such as the US and Nordics, which benefit greatly from strong cultures of retail investing,’ he added.
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