FS26/3 holds the line on high-risk retail investment access

Feedback statement FS26/3 keeps the United Kingdom’s high-risk promotion gates in place and sequences later work on mainstream risk warnings, appropriateness testing and model portfolios, rather than opening speculative products to a wider retail market.

The Financial Conduct Authority published FS26/3 on 16 October 2026 as its response to discussion paper DP25/3, open from 8 December 2025 to 6 March 2026. Paragraph 2.7 records a behavioural experiment in which 16% of participants could legitimately self-certify as high net worth or sophisticated, while 53% of the control group self-certified once the criteria were shown. Brokers, platforms and advisers need to know which frictions stay in force now, and which sit on a dated programme with no new Handbook text.

Key facts

• FS26/3 was published on 16 October 2026 as feedback to DP25/3, open from 8 December 2025 to 6 March 2026. On 28 October 2026 three stakeholders were added to page 17 of the PDF.
• Citing the Financial Lives Survey 2024, FS26/3 says non-advised platform use rose from 5.9% in February 2020 to 11% in May 2024, and that 41% of consumers with £10,000 or more still keep at least three-quarters of that money in cash.
• Citing the Mills Review, FS26/3 says one in five UK adults are open to artificial intelligence making decisions for them, and that 56% of investors aged 18 to 40 trusted general-purpose tools more than television, radio, the press or influencers.
• Paragraph 2.6 says Financial Promotion Order high-net-worth thresholds have not changed since 2001. Paragraph 2.10 says the harm needs legislation.
• The statement dates a mainstream risk consultation to the first half of 2027, appropriateness engagement to 2027, model-portfolio findings to the first quarter of 2027, and full Consumer Composite Investment force to 8 June 2027.
• On 7 February 2025 the FCA said 19,766 financial promotions were amended or withdrawn in 2024, up 97.5% on 2023 (FCA press release).

Methodology and sources

The primary text is the 19-page feedback statement PDF, with the 28 October 2026 revision note on the publication page. DP25/3 fixes the audience as retail platforms and firms selling fractional investments, contracts for difference, leveraged exchange traded products and qualifying cryptoassets. Pins follow what FS26/3 names: COBS 4.12A, COBS 10, COBS 10A and COBS 22, and the December 2025 page on mainstream risk warnings. The comparison uses section 25 of the Financial Services and Markets Act 2000, article 48 of the Financial Promotion Order, Annex II to Directive 2014/65/EU, and the Securities and Exchange Commission account of Rule 501(a). Figures appear only as the statement cites them. The statement itself makes no rules.

Related:CP26/38 and what the Financial Crime Guide would change

What FS26/3 decides, and what it leaves standing

FS26/3 treats investor categorisation as the opening gate on a non-advised journey, because the label decides which products a person may be shown and which protections remain. Section 21 of the Financial Services and Markets Act 2000 restricts an invitation or inducement unless the communicator is authorised, an authorised person approves the content, or an exemption in the Financial Promotion Order applies. Those exemptions let an unauthorised person promote unlisted equity and debt to someone who self-certifies as high net worth or sophisticated, and that certificate takes the promotion outside the requirement that communications be clear, fair and not misleading. In the behavioural experiment in paragraph 2.7, 16% of participants could legitimately self-certify, while 53% of the control group self-certified after the criteria were shown. Most respondents called the process easy to abuse. The statement’s position is that legislation is required, whether the thresholds rise, self-certification goes, or the exemptions are removed in their current form.

A minority thought more intervention unnecessary. Others wanted a 24-hour confirmation or a firm-side eligibility check. Paragraph 2.10 says the FCA lacks power to close the harm and will keep talking to HM Treasury. Schedule 5 was rewritten on 31 January 2024 and again on 27 March 2024 as drafting history, rather than as a new wealth test in FS26/3. Thresholds remain those set in 2001, out of line with the elective-professional investable-assets proposal and the qualified-investor test under the Public Offers and Admissions to Trading Regulations.

Figure 3 keeps three lanes for mass-market, restricted and non-mass market investments. Listed securities and authorised funds may be mass-marketed, and appropriateness generally falls away where there is advice or the instrument is non-complex. Restricted mass market investments, including peer-to-peer agreements, qualifying cryptoassets and long-term asset fund units, may be mass-marketed only with conditions and, unless the client is advised, an appropriateness assessment. Non-mass market investments, including speculative illiquid securities, stay off a retail mass market and need a preliminary suitability assessment. Figure 2 adds a 24-hour cooling-off period on a restricted or non-mass market investment.

Contracts for difference sit under COBS 22, with leverage limits and negative balance protection, while leveraged exchange traded products can amplify moves and reset daily without those marketing rules. Paragraph 2.42 keeps peer-to-peer agreements restricted because compensation-scheme cover, capital and liquidity have not materially improved. Fractional shares were welcomed where the risk matches the share, and paragraph 2.46 points to CP26/32 in September 2026, which treated a mimicking derivative as riskier. On mainstream promotions, “capital at risk” need not appear every time, with a rules review in the first half of 2027.

How the UK, the EU and the US test a step outside retail protection

Sources: FSMA 2000, section 25; Financial Promotion Order, article 48; FS26/3; Directive 2014/65/EU consolidated text; SEC explainer, 12 June 2024; SEC verification note, 21 March 2025. Table compiled on 29 October 2026.

An appropriateness assessment on a non-advised sale is the check on whether a retail client has the knowledge and experience to understand a complex or higher-risk product before the order is processed. FS26/3 separates two regimes platforms still run together. COBS 10 and COBS 10A, from the 2007 implementation of EU law, generally leave out non-complex instruments dealt at the client’s initiative, and where the firm judges an investment not appropriate it must warn the client and may still proceed if the client asks. COBS 4.12A, applied to restricted mass market investments by the 2022 rules, is tighter: the firm may process the order only after assessing the product as appropriate, and two failed assessments mean a wait of 24 hours. Most respondents supported the test and asked for a clearer non-complex definition because firms apply it inconsistently. FS26/3 leaves both rule sets in place, calls the test central for complex products and cryptoassets, and defers changes to a practice review with stakeholder engagement in 2027.

A UK certificate can take a promotion outside the authorised-person regime. Annex II requires two tests before retail protections fall away, and US Rule 506(c) asks for a verification file. ASIC is testing a long extension of its contracts for difference intervention, while this statement leaves COBS 22 in place. A CASS 7 segregation arrangement does not settle the marketing question. Qualifying cryptoassets stay restricted, so the exclusion tests in CP26/36 are no basis in FS26/3 for dropping warnings. Wider perimeter questions sit on the regulation desk.

"More dire warnings are not what is needed. Rather, balanced, engaging, understandable and useful language is being encouraged with consultation on what this might look like in the new year."

"The regime does not align with other regulatory hurdles in the UK and the hurdle for what amounts to being a high-net worth individual has not been effectively raised in over 25 years."

— Elizabeth Budd, Partner, Pinsent Masons (Pinsent Masons, 20 October 2026)

The warning line matches the mainstream workstream. Budd said any increase in the high-net-worth hurdle would take time, and that a sudden leap would likely make fundraising harder at the smaller end of the market. FS26/3 notes that a small minority wanted the exemptions left alone, and it leaves the design of any new test with ministers.

Where enforcement already shows the cost of a weak gateway

On 21 October 2026 the FCA banned Jeffrey Dawkins, former chief executive of Vector Wealth Ltd, and said he had been fined nearly £270,000. The press release says that in 2019 he sold the firm to a director disqualified for 12 years in August 2014, let that person use the authorisation to sell mini-bonds. Investors confirmed they were high net worth or sophisticated before seeing the marketing. Average subscriptions were £105,000, one person put in £1.1 million, and expected losses are about £4 million. Kadir Kanizi was banned from senior management, and a calculated penalty of £80,096 was cut to £20,000.

The notices sit outside FS26/3, and the sales predate the discussion paper, but they match paragraph 2.7: a high-net-worth or sophisticated confirmation as the door to a high-risk promotion. In 2024, 19,766 promotions were amended or withdrawn, up 97.5% on 2023, and the FCA issued 2,240 warnings about unauthorised firms. The section 21 approver gateway stays in force. Selling a UK permission as a marketing halo has a separate precedent in the closure of 24 contracts for difference firms.

"Jeffrey Dawkins acted as a front man for a banned director, helping high-risk investments look safer than they were. Mr Dawkins and Mr Kanizi allowed misleading promotions to draw in investors, many of whom now face significant losses. Mini-bonds and similar investments are very high risk, and people should be extremely cautious."

— Therese Chambers, executive director of enforcement and market oversight, Financial Conduct Authority (FCA press release, 21 October 2026)

What this means for brokers, platforms and advisers

For a contracts for difference broker, COBS 22 stays, including leverage limits and negative balance protection. Leveraged exchange traded products can carry a daily reset without those marketing rules, so a dual-product firm should expect the categorisation review to ask why the friction differs. Paragraph 2.19 adds that copy trading, push notifications, reward nudges and leaderboards can make speculative products look simpler than they are. Interactive Brokers, AJ Bell and Barclays are among the named respondents. The statement attributes no comment to any one firm.

For a platform, Figure 2 still runs from categorisation through the promotion, any required appropriateness step, and a 24-hour cooling-off period into a restricted or non-mass market investment. Mainstream wording can already move under the December 2025 expectations, while prescribed high-risk warnings stay. Qualifying cryptoassets and peer-to-peer agreements remain restricted. Paragraph 2.46 treats an interest in the underlying share as capable of sharing that share’s risk, and a derivative as something that must be named as a derivative. A general-purpose model that supplies appropriateness answers is the design question queued for 2027.

For an adviser, advice changes some tests and leaves categorisation standing. Figure 3 drops appropriateness for an advised client, and for a non-complex mass-market instrument. Paragraphs 2.3 and 2.6 still treat an elective professional opt-up, and a coached high-net-worth statement, as ways retail protections are given away. On model portfolios, most respondents wanted Consumer Composite Investment-style disclosures, a minority resisted a single template, and the FCA stopped short of mandating alignment. The manufacturer review of construction, selection, risk ratings, conflicts, rebalancing and oversight is due by the first quarter of 2027.

Compliance teams have no new instrument to build on publication day. The public record now says categories are too broad, self-certification is abused, mainstream warnings are defensive, and appropriateness runs from rigorous to tick-box. Until the first-half-of-2027 consultation, files are read against the December 2025 expectations and COBS 4 as it stands. The 2024 promotions tally is context, not a quota in FS26/3.

What is queued, and what is still only a review

Chapter 1 dates the work without making a rule: a high-risk category review, a mainstream risk consultation in the first half of 2027, appropriateness engagement during 2027, and model-portfolio findings by the first quarter of 2027. Consumer composite communications are fully in force on 8 June 2027, and CP26/24 disclosure rules are aimed at the end of 2026. There is no Treasury bill date in the statement, and no decision to copy COBS 22 onto leveraged exchange traded products.

TL;DR

FS26/3, published on 16 October 2026, keeps high-risk investments behind existing gates while the FCA tries to make mainstream investing easier to understand. Self-certification under the Financial Promotion Order stays with HM Treasury. The statement says the high-net-worth thresholds have not changed since 2001, and its experiment found that 53% of a control group self-certified when only 16% could legitimately do so. Firms keep the three-category promotion map. A mainstream risk-warning consultation is planned for the first half of 2027, appropriateness engagement for 2027, and model-portfolio findings by the first quarter of 2027. No new Handbook rule takes effect from the feedback statement. Brokers, platforms and advisers should read it as the next set of supervisory questions, not as a reason to drop a friction that COBS 4, COBS 10 or COBS 22 still imposes.

FAQ

What is FS26/3?

FS26/3 is the Financial Conduct Authority feedback statement on DP25/3, published on 16 October 2026, about consumer access to investments. The statement records responses and a sequence of later work, and no Handbook rule changes on the day it appears. That sequence is a high-risk promotion review, a mainstream risk-information consultation in the first half of 2027, appropriateness engagement in 2027, and model-portfolio findings by the first quarter of 2027. Any change to the Financial Promotion Order is left to HM Treasury.

Does FS26/3 raise the high-net-worth exemption?

The exemption stays as it is. Article 48 of the Financial Promotion Order takes certain communications outside the section 21 restriction, and paragraph 2.6 of FS26/3 says the high-net-worth thresholds are low by international standards and have not changed since 2001. They also sit apart from the investable-assets route the FCA has proposed for some elective professional clients and from the qualified-investor test in the Public Offers and Admissions to Trading Regulations. Most respondents called self-certification easy to abuse. Paragraph 2.10 says legislation is required.

What happens to appropriateness assessments?

The tests stay, and FS26/3 promises a practice review rather than a replacement rule. COBS 10 and COBS 10A still warn and may proceed, and they fall away for non-complex instruments at the client’s initiative. COBS 4.12A still stops a restricted mass market order until it is judged appropriate, with a 24-hour pause after two failures. Respondents said the non-complex label is uneven and that looked-up answers can hollow an online test. Paragraph 2.65 keeps the assessment central for complex products and cryptoassets, with engagement planned for 2027.

When will the model-portfolio review report?

The multi-firm review of manufacturers has started, and FS26/3 expects findings by the first quarter of 2027. It looks at construction, asset selection, risk ratings, conflicts, rebalancing and oversight under the Consumer Duty. Most respondents said clients treat multi-client model portfolios as packaged products and wanted disclosures lined up with the Consumer Composite Investment regime. A minority said one template would hide real differences in style. The statement stops short of imposing that alignment.

Are leveraged exchange traded products now treated like contracts for difference?

Paragraphs 2.15 and 2.16 record the gap and leave it open. Contracts for difference stay under COBS 22, including leverage limits and negative balance protection. Leveraged exchange traded products can amplify an index or commodity, reset daily and are built for short holding periods, yet those marketing and distribution rules do not apply to them. FS26/3 commits to a categorisation review with stakeholders, not to copying the contracts-for-difference rulebook across. Binary options, the statement says, remain banned for retail clients.

How should a platform distinguish a fractional share from a derivative?

The customer has to be able to tell them apart. FS26/3 reports support for fractional shares whose risks match the underlying share, and concern that a derivative can lack ownership, votes, dividends and compensation-scheme cover. Paragraph 2.46 says the September 2026 consultation CP26/32 treated a true fractional share as close to the whole share and a derivative exposure as riskier, needing stricter safeguards. The feedback statement leaves those handbook amendments unmade. Warnings and any appropriateness step should follow the instrument the client is actually buying, not the label on the button.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.