FCA lets £10m cash clients opt out of consumer duty safeguards

UK FCA kills EU PRIIPs, rolls out Consumer Composite Investments, and lets wealthy clients opt out of consumer duty as it rewires post‑Brexit retail markets.

Summary

• FCA will scrap EU PRIIPs disclosures and introduce a Consumer Composite Investments framework for funds, trusts and unit‑linked policies from June 2027.​
• Around 12.5 million UK adults hold products moving into CCI, with new rules simplifying cost disclosures and tightening risk–reward communication.​
• Professional client tests are overhauled as £10m‑cash individuals can waive consumer duty while the quantitative trading test is dropped over abuse concerns.

Britain’s Financial Conduct Authority announced reforms aimed at increasing retail investment participation, including the elimination of European Union-era disclosure requirements, updated professional investor classifications, and revised risk frameworks, the regulator said Tuesday.

UK retail investment rules change

The reforms represent part of an initiative to make stocks and shares more accessible to individual investors while maintaining consumer protections, according to the FCA.

“This is one of the biggest weeks for UK retail investment in recent history,” Jonathan Lipkin, Director of Policy, Strategy and Innovation at the Investment Association, told Reuters. “It is also, relative to the EU, a moment in time where we more clearly define how we’re going to go forward in a post-Brexit environment,” he said.

The FCA stated it will eliminate the EU’s disclosure rules under the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation. The regulator will replace them with a framework for Consumer Composite Investments (CCI), covering investment funds, investment trusts, and unit-linked life insurance policies, according to the announcement.

The FCA estimates approximately 12.5 million UK adults hold products that will be covered under the CCI framework. The regulator has consulted on the framework since last year, and the final rules simplify cost disclosures and clarify the connection between risk and reward, the FCA said. The framework is scheduled to take effect in June 2027.

The regulator also outlined revisions to client classifications to distinguish between retail and professional investors. Professional clients will no longer be covered by the FCA’s consumer duty, which imposes higher standards of care, according to the announcement.

The threshold for professional status remains high, but individuals holding at least £10 million ($13.3 million) in cash can now opt out of consumer protections, the FCA stated. The regulator is also eliminating the “quantitative” test, previously based on criteria such as trading at least 10 times per quarter, citing potential for misuse.