As of April 2026, the FCA has introduced a new regulatory return requiring certain investment firms to report on:
- Client categorisation under COBS 3; and
- The volume of “certified” and “restricted” investors to whom financial promotions have been communicated during the reporting period.
At first glance, the return appears to be a relatively straightforward data-gathering exercise. In practice, however, it is closer to an attestation-style submission, requiring firms to demonstrate how they have identified relevant populations and justified the categorisations applied.
Why has the FCA introduced this return?
The FCA has consistently highlighted weaknesses in:
- Client categorisation assessments
- Supporting documentation and audit trails
- Governance and oversight frameworks
Particularly in its supervisory work on corporate finance firms, the regulator has observed that deficiencies in these areas can lead to the misapplication of regulatory protections.
This return enhances the FCA’s ability to:
- Monitor how firms are applying client categorisation rules under COBS 3
- Assess the extent to which firms are communicating financial promotions to investor groups subject to high-risk investment restrictions
- Identify outliers and supervisory priorities across sectors
It also aligns with broader reforms introduced under FCA Policy Statement PS22/10, which reshaped the investor “journey” and tightened requirements around high-risk financial promotions.
Understanding the two “gates” of the return
The return is triggered through two key scope questions.
Gate 1: Designated investment business and/or financial promotions (COBS 4)
Firms must assess whether, during the reporting period, they:
- Provided services in the course of designated investment business, and/or
- Communicated financial promotions within scope of COBS 4
If either condition is met, firms must report the number of clients, split by category.
A critical technical point is the FCA’s definition of “client” under COBS 3.2.1R. This extends beyond onboarded customers to include individuals to whom a financial promotion is or is likely to be communicated. This means firms must look beyond traditional client lists and consider wider contact populations.
Gate 2: Promotions to certified/restricted investors
Firms must also assess whether they communicated financial promotions to any of the following investor types:
- Certified high net worth investors
- Certified sophisticated investors
- Self-certified sophisticated investors
- Restricted investors
If so, firms must report the number of investors in each category. This requirement is distinct from COBS 3 categorisation. It relates instead to financial promotion exemptions and investor pathways, as defined in FCA Policy Statement PS22/10.
Section 2: Reporting the “number of clients”
Where Gate 1 applies, firms must report the total number of clients (as defined under COBS 3) to whom they:
- Provided designated investment business services; and/or
- Communicated in-scope financial promotions
These must be split into:
- Retail clients
- Elective professional clients
- Per se professional clients
- Elective eligible counterparties
- Per se eligible counterparties
Importantly, the scope includes corporate finance and venture capital contacts. Even where no service is provided, individuals may still fall within the definition of “client” for financial promotion purposes under COBS 3.2.2G.
Section 3: Reporting certified and restricted investors
Where Gate 2 applies, firms must report the number of investors in each category to whom financial promotions were communicated during the reporting period.
This includes communications made:
- To comply with FCA financial promotion rules; or
- In reliance on exemptions (e.g. under the Financial Promotion Order)
The categories are:
- Certified high net worth investors
- Certified sophisticated investors
- Self-certified sophisticated investors
- Restricted investors
Firms should note that this requirement focuses on who received promotions, rather than when certification was obtained.
Counting methodology: judgement is required
The FCA acknowledges that the same individual may be counted more than once (e.g. across different campaigns or services). Firms are permitted to double count, provided their approach is reasonable and consistently applied.
In practice, firms should clearly document:
- Whether counts reflect unique individuals or instances of communication
- How group entities, nominees, and intermediaries are treated
- What constitutes a “communication” (e.g. email campaigns, events, deal-specific outreach)
Consistency and defensibility are key.
Common pitfalls this return will expose
- Assumed professional client status
The FCA has identified cases where firms apply professional client status without sufficient evidence or valid criteria.
- Excluding financial promotion recipients
Under COBS 3.2.1R, promotion recipients may qualify as “clients” even if no service relationship exists.
- Fragmented data sources
Relevant data is often dispersed across:
- KYC/onboarding systems
- CRM databases
- Marketing platforms
- Deal logs
- Compliance approval records
Reconciling these datasets is often the most resource-intensive aspect of the exercise.
A practical preparation checklist
To prepare for submission, firms should:
- Confirm scope:Assess whether Gate 1 and/or Gate 2 applies.
- Define a countingmethodology:Establish and document a consistent approach.
- Identifyrelevant populations: Include both Service clients; and Financial Promotion recipients (including likely recipients)
- Map client categories:Allocate COBS 3 categories accurately andevidence decisions.
- Map investor types:Identifyand classify certified/restricted investors under the financial promotion regime.
- Strengthen governance:Ensure compliance review andappropriate senior management sign-off.
- Maintainaudit trails: Retain methodology documentation, data extracts, and justification for any judgement applied.
Final thoughts
While the return is numerical in format, it is qualitative in substance. Firms should treat it as a supervisory touchpoint that tests:
- The robustness of client categorisation frameworks
- The integrity of financial promotion controls
- The quality of underlying data and governance
Early preparation will be critical, particularly where data is not readily accessible or requires reconciliation across multiple systems. Firms that approach this exercise proactively will be better positioned not only to meet the reporting deadline, but also to withstand potential FCA scrutiny in this area.
How Complyport Can Help?
- Client Categorisation Frameworks and Regulatory Alignment: Complyport supports firms in reviewing and enhancing their client categorisation frameworks under COBS 3 to ensure they are robust, well-evidenced and aligned with FCA expectations. We help firms assess the validity of categorisation decisions (including elective professional and eligible counterparty assessments), identify gaps in documentation, and strengthen audit trails.
- Data, Methodology and Regulatory Reporting Readiness: Complyport works with firms to design and document clear, defensible methodologies for completing the “Client Categorisation and Certified Investor” return. We help firms reconcile data across systems (CRM, onboarding, marketing and compliance logs), define counting approaches (e.g. unique clients vs interactions), and establish repeatable reporting processes.
- Governance, Oversight and Assurance: We support firms in strengthening governance and oversight around client categorisation and financial promotions, ensuring appropriate review, challenge and senior management sign-off. This includes developing internal policies, enhancing controls, and conducting independent assurance reviews to test the integrity of reported data.
Contact Us
To discuss how the FCA’s evolving reporting requirements may impact your business, speak to one of our experts.
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