The UK Financial Conduct Authority (FCA) has proposed doing away with its existing mandatory quantitative wealth requirement for clients of investment firms to register as professionals.
The proposal, which could have a significant impact on the brokerage sector, was published in a consultation paper by the FCA in December, CP25/36, that was not widely reported on at the time. The consultation is open until 2 February 2026.
Under current UK regulation, a professional client is deemed capable of making his or her own investment decisions and understanding the risks of such decisions.
They can trade products that are restricted or banned for retail clients. Brokers are able to offer them higher margins or leverage, under more favourable terms.
London-listed IG Group, for example, offers several benefits to professional clients, including a reduction in margin rates (it highlights that its FTSE rate of 5% is reduced to 0.45%).
Currently, there are both quantitative and qualitative requirements a client must fulfil before being classified as an elective professional.
The quantitative requirement specifies that a client must meet at least two of the following three requirements: a financial instrument portfolio with more than €500,000 ($583,00) at least 10 significant transactions on the relevant market per quarter, or relevant professional experience in financial services.
For its purposes IG Group specifies that a “significant trade” is “£10,000 notional for equity trades and £50,000 for everything else”.
The qualitative requirement is currently that “the firm undertakes an adequate assessment of the expertise, experience and knowledge of the client” that ensures they are capable of understanding the risks involved.
In the consultation paper, the FCA noted: “We agree [with firms the regulator has spoken with] that the current quantitative criteria… are no longer fit for purpose. They are both too narrow and… open to misuse.”
“We therefore propose to remove the current quantitative test as a mandatory element of the qualitative assessment.”
Instead, the regulator suggested that clients could pass a separate quantitative requirement based on net worth at a much higher level, at least £10m.
Alternatively, they could qualify through passing a more stringent qualitative criteria confirming their status as professionals, which would not require them to meet the wealth threshold.
The FCA plans to identify a set of specific factors that firms must consider in conducting the new beefed-up qualitative assessment following the consultation.
Key factors of the qualitative assessment the FCA wishes to preserve and strengthen include tests of financial resilience, account history, occupational experience, as well as relevant knowledge and understanding.
Regardless of how they qualify, the FCA emphasises clients would still need to actively opt-in to professional classification, which removes a number of consumer protections, including risk warnings and the Financial Services Compensation Scheme (FSCS) guarantee on investment account up to £85,000 in case of firm failure.
Under proposed new safeguards, firms would be prohibited from any attempt to incentivise, mislead or pressure clients into opting up.
