The UK’s Financial Conduct Authority (FCA) has announced one of its most significant reform packages in years to boost retail investor participation in shares and bonds—marking a clear divergence from EU investment rules.
The FCA released three policy papers, outlining reforms that aim to make investing more attractive, transparent, and consumer-friendly, while strengthening protection where necessary.
🔍 Key Reforms
1. Scrapping EU PRIIPs Disclosure Rules
The FCA will eliminate the widely criticised EU PRIIPs regime and replace it with a new Consumer Composite Investments (CCI) framework—covering funds, investment trusts and unit-linked policies.
- Effective: June 8, 2027
- Target market: 12.5 million UK adults
- Focus: clearer cost disclosures, more explicit link between risk & reward, and outcomes-based supervision.
2. Updated Investor Categorisation
- The threshold to qualify as a professional investor remains high.
- Individuals with £10M+ in cash may opt out of consumer-duty protections.
- The outdated “quantitative test” (e.g., 10 trades per quarter) will be scrapped due to abuse risk.
3. Rethinking Investment Risk
The FCA is reassessing:
- Consumer warnings to encourage better-informed risk-taking,
- The “opportunity cost” of excess cash holdings,
- Risks of trading-app gamification,
- Dangers from crypto-hoarding listed companies that expose retail investors to crypto volatility without regulatory safeguards.
💬 Industry Perspective
- Investment Association: “One of the biggest weeks for UK retail investing… a defining post-Brexit moment.”
- Legal experts expect more FCA supervision, with both benefits and risks from more flexible, principles-based rules.
- White & Case: Reforms will help align the UK more closely with the US and Nordics, where retail investor participation is strong.
📌 What’s Next?
Later this week, the FCA will publish final rules clarifying the line between regulated financial advice and more affordable, lighter-touch “targeted support”—allowing firms to guide customers who may be holding too much cash or under-saving for retirement.