Client Categorisation Reform: Top Ten Things You Need To Know

The FCA has issued consultation paper CP25/36 on changes to the client categorisation regime. Reform of the regime was one of the items included as part of a plethora of measures set out in the Government's growth and competitiveness strategy.¹

The FCA has made clear that the aim of the reforms is to rebalance risk and allow firms to make well founded assessments of whether a client meets the threshold of a professional client. As expected, the changes are intended to shift from a tick box approach to a more flexible and considered approach that allows for judgments taking account of broader experience. Whilst firms will likely welcome the greater discretion, there will be a greater onus on firms to exercise judgment carefully and in accordance with Consumer Duty standards.