FCA Initiatives For Retail, Wealth And Private Banking—FCA DP25/3 On Expanding Consumer Access To Investments

The FCA has launched a bundle of far-reaching initiatives for the retail, wealth and private banking sector, including a discussion paper seeking views on what else can be done to help consumers take informed risks and equip them with the confidence to invest. The FCA has launched a bundle of far-reaching initiatives for the retail, wealth and private banking sector, including a discussion paper seeking views on what else can be done to help consumers take informed risks and equip them with the confidence to invest. This bulletin provides an overview of the discussion paper and key areas of focus.

FCA discussion paper

On December 8, 2025, the FCA published a discussion paper titled “Expanding consumer access to investments”, DP 25/3.¹ The positioning: “In 2025, we made the most significant policy changes and proposed changes to the retail investments landscape for a generation. But we may need to do more to adapt our rules to reflect the changes in how consumers can access and own investments, and what they can invest in. We want your views on how we can improve and streamline our Handbook to increase consumer confidence in investing and how we should prioritise future work on this.”

• Timing—The FCA is asking for comments by March 6, 2026.

• Next steps—The FCA has not been clear on this, simply stating that it will consider feedback and consult further in due course. In our view, we are likely to see the FCA look very hard at the following:
  • First, where “inconsistencies and complexities in [the] regulatory framework” are creating barriers to retail customers investing. That is, is it possible to pull together a list of specific changes to the FCA rules that can be actioned sooner rather than later, to bring about a tangible improvement. This is really about the idea of “low hanging fruit” – it will not necessarily help UK plc “attack the problem at source”, but in our view, it is still welcome as it would be a move in the right direction, signal to the market that the FCA is serious in its reform agenda, and provide some short to medium-term improvement.
  • Secondly, what is the right approach to regulation in this area. This is about the FCA taking a step back and making some choices for the longer term, bearing in mind key regulatory drivers and technological advancements, but also considering how it should approach product regulation in this area to get to the right result.

The discussion paper also signals a number of specific subjects the FCA has started to focus on – such as whether the regulation of MPSs is right. It seems likely that the discussion paper will be a first step in a longer series of regulatory initiatives on some of these topics, although we would expect the FCA to be highly thoughtful and selective when doing so, given the pressure being placed on it by the UK government to prioritise a growth agenda and reduce the regulatory burden.

Key regulatory drivers

Our takeaway points on this are as follows:

• Cash holdings—First, a point made in the past by the FCA—millions of UK adults hold at least GBP10,000 mostly or entirely in cash and have some appetite for investment risk but are not investing. It has previously said “These people might benefit from support to do more with their money than leave it in cash.”² It now reiterates these messages, noting that 61% of adults with GBP10,000 or more in investible assets hold all or most of it in cash.³ Put simply, the FCA does not see this as a good result for consumers.

We note also the following from a recent industry report:⁴

“The UK has a GBP610bn problem disguised as prudent saving. While UK households have saved GBP1trn in cash since 2020, nearly 15 million people are holding surplus wealth (savings above what is considered necessary for an emergency, which is classed as over six months of income) in cash, an increase of 33% in just two years.

• Economic growth—The FCA recognises that higher investment levels by retail will “facilitate capital for firms and support economic growth over the longer term”. This dovetails with the broader agenda of the FCA and UK government in favour of “regulation for growth”.⁵
• Trust and confidence—The FCA considers one of the “problems to solve for” is a fear of scams:

“34% of individuals who invest in traditional savings products such as Individual Savings Accounts and pension plans are hesitant to invest because they are concerned about potential scams. Improving our regulatory framework is essential to building trust and giving consumers the confidence to invest.”

• Balance—The FCA says it wants to “help consumers have more confidence to take on the right level of investment risk for them”. But it also wants to get the balance right, e.g. to mitigate the risk of consumer harm from investment scams and losses from inappropriate high-risk investments.
• Reform and refresh—The FCA says it recognises that some of its rules do not necessarily reflect the way markets now operate and the time could be right for an update. It points to initiatives already underway, such as the new Consumer Composite Investments (CCI) rules, and its proposals on targeted support. But more can be done.

The upshot: “A stronger and smarter retail investment culture is good for consumers, the economy and the country. This paper asks for your views on what else we can do to ensure our regulations help consumers take informed risks, and equip them with the confidence to put their money to work in search of higher long-term returns than cash savings.”

In particular, the FCA says it wants to explore how it can:

• “Support continued innovation by firms in this market
• Ensure that for similar products, consumers have similar rights and protections
• Shape access to high-risk investments that require professional expertise, and ensure retail consumers cannot easily access inappropriate investment opportunities
• Regulate how firms communicate and promote to consumers to enable them to make informed decisions, including ensuring they can compare similar investments against each other
• Introduce positive frictions to enable more considered decision making, such as our financial promotion rules and appropriateness testing.”

In our view, this is all incredibly welcome, and a step in the right direction.

Specific areas of detail on which the FCA wants views

Beyond the “bigger picture”, the FCA has indicated in the discussion paper a keen desire to engage with industry and hear views on specific points:

• Trading apps and digital engagement practices (DEPs)—The FCA notes the increased use of non-advised platforms and apps, almost doubling between 2020 and 2024 (5.9% to 11%).

In terms of getting people into investing, the FCA notes that almost half of trading app users (47%) are aged 18-34, with apps considered to have “successfully engaged new groups of consumers in investing”. However, the FCA also expressed concern about design features which can blur the line between investing and gambling-like behaviours. The FCA seeks feedback on whether the rules mitigate the risks arising from DEPs.

• Fractional investments—The FCA has said that it wants views on how its rules could “better address” the opportunities and risks of fractional investments, and in particular, whether it should apply rules consistently to a fractional investment as well as the underlying asset, and “when tailored protections may be needed”. At the same time, it wishes to support innovative ways of distributing investments to retail:

“We are seeing firms dividing ownership of a whole asset, so divisions are available at a proportion of the cost and can be offered to different consumers (‘fractionalisation'). We typically see firms such as trading apps offering fractional investments and have also seen firms applying for our innovation services with similar offers.”

• Model or managed portfolio services (MPS)—These have become increasingly popular over the last 20 years, with some firms considering them a key part of their offering, and a number of industry reports suggesting a strong growth trajectory. The FCA considers that its targeted support initiative may also give this market segment a boost.

There are no specific FCA rules for an MPS. This might be slightly anachronistic in that an MPS may be described as an “unwrapped” version of a retail fund—the FCA observes that some MPSs are especially close to a “fund of funds” structure:

“However, model portfolios are not subject to comparable conduct of business, product or disclosure requirements as funds. There are also often complex chains between distributors and manufacturers. This might not help consumers choose the investment services they need or understand what protections or outcomes to expect from each type of investment.”

Key comments from the FCA:

• It says that it wants to consider how to “rationalise the expectations” for authorised funds and MPSs:
  • to help consumers compare them more easily—in particular, risks, costs and opportunities—while not reducing innovation; and
  • to improve efficiency and reduce duplication for firms who operate both, especially around disclosure.
• It wants views on the pros and cons of standardising disclosures, and references the standardised risk scores which apply to authorised funds (but not an MPS).
• It is considering if some changes may “help simplify the regulation of the investment management sector”, suggesting it may look at rules to be followed when a firm designs and manages an MPS, such as rules on investment powers, liquidity profile and management, and fair treatment in carrying out client orders. It is not clear how welcome these thoughts will be.

• Speculative products—The FCA is seeking input as to whether a more consistent regulatory approach is required to certain speculative products, focusing on the nature of the risk rather than the product label. Examples cited include CFDs, ETPs, structured products and SCARPs and certain crypto “proxies”.
• Financial promotion and distribution—The FCA rightly points out that the UK financial promotion regime originated from domestic legislation and rules, while the rules on distribution and selling were inherited from the FCA framework. Anyone involved in day-to-day work in this area will confirm the regime is complex and unwieldy.

For some, however, there may be resistance to change. Although it may make sense to do a complete rewrite to rationalise and simplify, given the time, cost and disruption this may entail, views on this may differ. Firms and industry bodies will no doubt consider this carefully to decide whether this is the right time for such reform, or whether this may simply distract firms from what they need to do right now, which is to focus on growth.

Leaving this bigger point to one side, the FCA would likely also welcome views on the regime as it has evolved over time— to confirm whether it has “landed in the right place” or needs to revisit this bearing in mind the new focus on growth and the desire for less risk aversion, e.g. considering mass market investments such as UCITS and traded shares/bonds vs LTAFs vs crypto vs unauthorised funds etc.

• Appropriateness regime—Anyone involved in MiFID implementation projects, nearly 20 years ago, will recall the difficulties encountered by the industry in relation to this regime. The FCA essentially wants industry views on three points of detail:
  • whether the tests in the rules need to be changed;
  • whether the rules achieve “the right balance”; and
  • whether the scope and application of the appropriateness test rules are “effective”. 
• The current rules are fragmented, with one regime for MiFID business and certain insurance distribution, and another for non-MiFID business, and additional rules for restricted mass market investments (RMMIs) such as certain crypto products. The regime works more naturally where a customer engages “one on one” with a firm, rather than in a purely digital context or via a platform. The regime involves complexity, with exceptions applying if certain services are provided at the “initiative of the client”, and in relation to “non-complex” financial instruments or insurance-based investment products.
•  Put simply, this is an area that is ripe for reform.

Recommendations for firms

We would encourage firms to engage with the FCA on this discussion paper, whether that means putting in their own response or feeding into responses prepared by industry bodies.

The messaging in the FCA's discussion paper is very open and solutions focused: “We recognise we may need to do more to adapt our rules to reflect the changes in how consumers can access and own investments, and what they can invest in. So we want your views on whether more needs to be done and what our priorities should be.”

In our view, this could be a “once in a lifetime” opportunity to reset the UK regulatory framework in relation to retail, wealth and private banking, and although there are challenges, there are also significant opportunities if the industry and the FCA can find the right ideas.

Footnotes

1. Expanding Consumer Access to Investments and  DP25/3: Expanding consumer access to investments

2.  Helping firms provide more support to customers making investment decisions

3. See also Financial Lives 2024 survey

4.  From cash to confidence: Building an investing nation

5.  Chair reflections: rebalancing risk