UK: FCA Policy Statement on the MiFID Organisational Regulation

Why should I read this?

Policy statement PS25/13 “The MiFID Organisational Regulation” sets out the FCA Handbook Rules for the transposed firm-facing requirements of the Markets in Financial Instruments Directive Organisational Regulation. 

The policy statement also responds to feedback to CP24/11, and as a result:

• disapplies the requirement to report a 10% drop in portfolio value to a retail client in COBS 16A.4.3UK for optional exempt (Article 3) firms, in line with MiFID firms, from 23 October 2025
• amends the definition of ‘durable medium’ in the Glossary to make electronic communications the default mode of communication with retail clients, from 12 January 2026

There will be a further consultation in November 2025 on streamlining conflicts of interest requirements and modernising client categorisation rules.

What has changed?

Transposing MiFID Org Reg requirements into the FCA handbook

The FCA are keeping the substance of the MiFID Org Reg requirements the same, without any policy or scope changes.

The few exceptions, in terms of minor changes, are set out in the derivation and changes table in Annex 4.  These changes are either to reflect the FCA’s Handbook drafting style and to clarify drafting, or to remove provisions which are already implemented into UK law, or have since been re-stated or repealed by HM Treasury.

Terminology has also been aligned with upcoming Consumer Composite Investments (CCI) rules, for example, the reference in COBS 6 Annex 7 has been changed from “product suppliers” to “product providers”.

Because the rules are essentially the same, for the most part market participants will not notice any difference between the application of the rules when they were in statute and the rules as they will be in the FCA Handbook.  What may be noticeable, however, is that in the future the FCA will be able to update the rules faster and with fewer formalities.  It will therefore be better able to respond to changes in circumstances and any emerging problems or distortions caused by the rules, although there will still be consultations and overarching guidance from HM Treasury, to preserve quality and proportionality. 

This flexibility would not be possible if the UK were still a Member State of the EU and this may drive further divergence from legacy EU rules.

Changes to retail conduct rules and feedback to CP24/11

There are two changes resulting from the proposals in CP24/11.  These are:

• removal of the requirement for firms providing portfolio management services to inform a retail client when the value of their portfolio fell by 10%
• making electronic communications the default mode of communication with retail clients in relation to MiFID Org Reg requirements. Firms will still be required to inform clients that they may request paper copies

These changes have already been made for MiFID investment firms trading with professional clients, but the Government wanted to consult more widely before applying the amendments to dealings with retail clients.

Modernisation of conflicts of interest and client categorisation rules

In CP24/24, the FCA sought feedback on improvements they could make, over time, to EU derived conduct and organisational rules and identified areas where greater flexibility could be introduced to allow for future market developments and innovation. The feedback was positive and in November 2025 the FCA will consult on proposals to streamline conflicts of interest requirements in SYSC 10 and to modernise client categorisation rules in COBS 3. 

Private Intermittent Securities and Capital Exchange System (PISCES)

The MiFID Org Reg continues to apply in a modified form for the purposes of the PISCES sandbox, as provided for by the PISCES Sandbox regulations.

Next steps

The new handbook rules will come into effect on 23 October 2025.  Prior to that date HM Treasury will lay a statutory instrument to revoke the MiFID Org Reg requirements, removing them from the statute book.  The removal of COBS 16A.4.3UK will come into force at the same time.

The changes to the durable medium definition will come into force 3 months after publication of the final rules on 12 January 2026.

A new consultation paper on conflicts of interest and client categorisation will be published in November 2025.

How Eversheds Sutherland can help

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