FCA publishes multi-firm review findings on client categorisation in corporate finance firms
The Financial Conduct Authority (FCA) has published the findings of a review of ten corporate finance firms to assess compliance with client categorisation rules under COBS 3 and certification requirements under COBS 4. The review found widespread weaknesses in the way firms assessed and documented client categories and investor certifications. Many firms relied on informal or inconsistent methods, failed to retain adequate records, or used invalid criteria when classifying clients and contacts as professional, high-net-worth, or sophisticated. Some firms also misunderstood or misapplied the relevant financial promotion rules and exemptions, issued promotions without valid investor statements, and lacked structured processes for reviewing and renewing certifications. Firms with clear, tailored policies and defined procedures demonstrated stronger compliance and more effective categorisation practices.