Investment Firm (Retail)

Retail investment firms in the UK, regulated by the Financial Conduct Authority (FCA), are licensed to provide specialised investment services tailored to individual clients, including portfolio management and investment advice. As a retail investment firm, businesses can serve retail clients with trust and compliance at the forefront, establishing themselves as reliable advisors in a market where consumer protection and responsible investment practices are paramount.

Overview

Services Provided

  • Portfolio management

  • Investment advice

  • Dealing in investments

  • Safeguarding and administration of assets

Capital Requirements

  • Retail investment firms must maintain a minimum capital of £75,000 (Permanent Minimum Requirement or PMR) under MiFIDPRU, with additional requirements depending on the complexity of services and the level of risk involved in serving retail clients.

Transaction Limitations

  • Retail firms must avoid mis-selling and ensure transparency in transactions. Limits depend on the specific services offered.

Safeguarding Requirements

  • Must follow FCA safeguarding rules, ensuring client funds and assets are protected in line with the Data Protection Act.

Jurisdictional Limitations

  • Operations are typically limited to the UK unless passporting is obtained for cross-border services.

Legal & Regulatory Framework

  • FCA Consumer Duty

  • MiFID

  • MiFIDPRU

Key Restrictions

  • Cannot handle client money for unregulated services.

  • Restricted from selling high-risk or speculative products to retail clients.

Regulatory authorisation process

  • The Financial Conduct Authority (FCA) usually assesses a complete application within 6 months.

  • The Financial Conduct Authority (FCA) requires an application fee of £2,720.

Exemptions & exclusions

  • Excluded bodies

    Under MiFID, specific entities are exempt for standard egulatory requirements: Insurers

    Certain intra-group service providers

    Public financial institutions

    Pension schemes

    These exemptions provide flexibility for institutions managing specific investment activities within the EU.

  • Excluded activities

    MiFID II regulations also exclude specific activities, such as: Intra-group services

    Own-account dealing

    Commodity trading under the ancillary activity exemption, provided they remain secondary to a firm’s main business.

    Additional exemptions apply under Article 3 for qualified UK firms, and reverse solicitation provisions allow third-country firms to serve clients without establishing a branch under certain conditions.

Regulatory Updates

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Deep dive into Investment Firm (Retail)

Introduction

  • Maximise your potential by becoming a Retail Investment Firm in the UK, overseen by the Financial Conduct Authority (FCA). Retail investment firms offer services such as portfolio management and investment advice, tailored for individual clients. This licence ensures that firms meet strict regulatory standards while offering personalised financial services under the UK's MiFID and FCA guidelines.

Definition

  • Retail Investment firms provide investment services to retail clients, focusing on managing and advising individuals on investment decisions. Retail investment firm UK must comply with strict FCA Consumer Duty regulations.

Additional Information (Services)

  • Portfolio management: Managing clients' investments based on their risk profiles and goals.

  • Investment advice: Providing clients with tailored investment recommendations that comply with MiFIDPRU requirements.

  • Dealing in investments: Buying and selling financial instruments for clients in accordance with FCA retail investment firm regulations.

  • Safeguarding and administration: Ensuring safe custody of client assets as required by MiFIDPRU standards.

Additional Information (Legal & Regulatory Framework)

  • FCA Consumer Duty: Ensures consumer protection and fair treatment.

  • MiFID: Provides the legal framework for investment services across Europe, ensuring consistency in services.

  • MiFIDPRU: Sets capital and operational requirements, ensuring financial resilience.

Links

Additional Information (Key Restrictions)

  • Retail investment firms cannot manage client money for services that are not explicitly regulated. They are also restricted from selling speculative, high-risk products to reduce potential financial harm to retail investors.