FCA sets out measures to boost retail investment

Transcript

Andrew Strange: On the 8th of December, the FCA announced a package of measures to help address retail participation in capital markets. The package includes measures that impact on innovation, provide firms with more flexibility, and seek to engage consumers.

The major set of final rules, that a lot of firms have been waiting for, is the policy statement around composite consumer investments disclosures, which is broadly the replacement disclosures for the UK on-shored PRIIPs and UCITS regime.

We now have the final rules, and firms have 18 months up until June 2027 to adopt the rules, while they can do so earlier if they wish.

The replacement disclosures tend to be more flexible and focus not just on risk warnings, but also thinking about things like performance and potential returns. They're less prescriptive, and while there are some changes in the detail and criteria compared to the previously consulted-on rules (in particular, that distributors will not be allowed to amend them) the onus really is on firms to make this work, to think about how it fits into your customer journey, and how you can best engage and provide the best context for the investments that you're offering your clients.

Within the package, there are a number of other announcements. There was a wide-ranging discussion paper which looks at expanding access to investments, including things like the retail investment campaign led by the IA. The discussion paper talks about the broad regulatory landscape, thinking about how it can be future-proofed for future types of investments. It thinks about things like fractional investments, and also specifically calls out managed portfolio services and their regulatory treatment.

The FCA also published a consultation on client categorisation and conflicts of interest, which is open until February, and that looks at distinguishing between retail and professional investors. Again, with this the onus is on firms to make sure it works and to be able to provide the evidence that what they're doing is resulting in good outcomes.

But it should provide greater clarity and will impact, whilst not necessarily the vast number of retail investors, may have an impact on some of the per se and elected professional clients.

The final announcement related to the impact of Consumer Duty on wholesale markets, an area where the industry's been calling for clarity and which featured in the Leeds Reforms in the summer and the FCA initially responded to in September. The FCA published an update on this, which looked at some elements of the PRIN and PROD rules. The FCA has agreed to do further work and consult with industry further in the first half of 2026.