On 8 December 2025, the Financial Conduct Authority (FCA) published a consultation paper (CP25/36) setting out its proposals to amend the rules on client categorisation and conflicts of interest.
Background
On 10 July 2025, the FCA announced its plans to review its client categorisation rules. In its letter to the Chancellor in September 2025, the FCA committed to certain design proposals to reset how wholesale firms distinguish between retail and professional clients.
Key proposals
CP25/36 sets out the FCA’s proposals for both client categorisation and conflicts of interest rules. In particular, the FCA proposes to:
- Introduce a new alternative route for clients above a certain wealth threshold, to be set at a threshold of £10 million in investable assets, to opt out of retail protections, subject to client consent.
- Remove the current quantitative test in COBS 3.5.3R(2) as a mandatory element of the qualitative assessment for meeting the elective professional client criteria.
- Enhance the qualitative assessment firms must consider when determining whether a client meets the threshold to be categorised as an elective professional client, including identifying a set of relevant factors firms must consider as part of a holistic assessment.
- Improve safeguards to ensure that a client can only be categorised as an elective professional if they have actively requested this and given informed consent to opt out of all retail protections.
- Simplify the ‘per se’ professional client category criteria based on its feedback to the discussion chapter in FCA Consultation Paper 24/24.
- Rationalise the conflicts of interest rules in the Senior Management Arrangements, Systems and Controls Sourcebook (SYSC) 10 and SYSC 3 as part of the FCA’s wider programme of changes to streamline the FCA Handbook.
- Rectify a technical issue with the non-MiFID personal account dealing rules.
Next steps
The FCA has asked for feedback on these proposals by 2 February 2026.