What does the term 'retail client' refer to under FCA regulations?

The term 'retail client' under FCA regulations specifically refers to an individual acting for personal purposes. This classification is significant because retail clients have different protections and regulations than professional or institutional clients. The FCA distinguishes retail clients to ensure that individual consumers receive adequate safeguards and suitable advice tailored to their personal financial needs and circumstances.

This category includes individuals who are not acting in a professional capacity and who typically lack the same level of experience, knowledge, or financial resources as institutional or professional investors. As a result, retail clients are entitled to greater protections under FCA rules to mitigate the risks associated with investing and financial trading.

Understanding this definition is crucial for firms as they must tailor their services and disclosures according to the needs of retail clients to comply with regulatory expectations.