The FCA will consult on a new regulatory regime for retail investors this autumn, according to the regulator's executive director for markets.
Speaking at the FT Adviser Financial Advice Forum in London, Sarah Pritchard said that as part of the government's "repeal and replace" programme triggered by the UK's exit from the EU there would be an opportunity to re-examine parts of Mifid II and Priips.
She said: "Confidence to invest was created by having easy-to-understand, clear, reliable information on which to make decisions.
"We now have a unique opportunity to design flexible and proportionate regulation which is tailored to the UK market. Regulation that supports retail investors to buy products that suit their needs.
"We plan to consult on the new regulatory regime this autumn, and to finalise rules in the first half of 2025. We will lean on the consumer duty, where it is most effective and efficient to do so."
As part of this process, Pritchard said the FCA would want to hear the views of financial advisers across the UK, saying such a conversation would be "crucial".
She said: "The shifts we are making are fundamentally about an adjustment to risk appetite.
"The concern regularly expressed is that we have become focused on the chance of loss at the expense of possible return.
"As we approach change, we must be open and honest – as we were with our capital markets reforms – that change brings with it a different balance of risk, and sometimes greater risk. That the more people who are supported to invest through accessible help and clearer disclosure, the more people will be affected by the inevitable ups and downs of the market.
"But while we should be clear on those risks, as we design a regulatory regime for the future, we must not lose sight of the fact a low-to-no risk appetite has an opportunity cost.
"Both for individuals and for the wider economic growth that benefits us all."
Outcomes-focused approach
Pritchard said the implementation of the consumer duty about 12 months ago meant the FCA was shifting its approach to regulating financial advisers to a less prescriptive and more outcomes-focused approach.
She said: "In doing so, we must respond to an ever-evolving landscape and – crucially – maintain our ability to think ahead, anticipate challenges and seize opportunities.
"That means being bold, proactive and embracing change for the better. It will require some open and frank conversations on risk and how we balance that. But all in order that we might reap the rewards."
Pritchard said the FCA's new approach would involve handing firms scope for flexibility and innovation in deciding how best to serve their clients.
She said: "That includes allowing smaller firms and sole traders - who we know often feel regulatory pressures the most keenly - to take an approach that fits their size, market and clients.
