LTAF now accessible to retail investors

03 July 2023

On 29th June, the FCA published its Policy Statement and Handbook rules (PS23/7) on "broadening retail and pensions access to the LTAF".

The rules broadly reflect the proposals that the FCA consulted on – most importantly, reclassifying the LTAF from a Non-Mass Market Investment (NMMI) to become a Restricted Mass Market Investment (RMMI). This means that the LTAF will be accessible to retail investors, subject to additional distribution requirements, such as providing the investor with a summary risk warning.

By way of summary:

Prior to the new rules

LTAFs could only be distributed to:

  • DC default schemes;
  • professional investors; and 
  • high-net-worth and sophisticated investors (this does include some, but not all, clients of wealth managers and advisers i.e. it includes the “higher end”, but not the “mass affluent” end).

Extension of eligibility

In summary, in addition to the categories referred to above, as of 3 July 2023, the LTAF can be made available to:

  • any advised/discretionary managed retail investors (provided a specific LTAF risk warning is provided to the end investor);
  • direct retail (up to 10% of their investable assets, provided a personalised risk warning is provided to the end investor and specific appropriateness requirements are complied with);
  • self-select DC investors (subject to an exposure limit and an appropriateness assessment); and
  • non-advised policyholders in long-term unit-linked products, including non-qualifying pension schemes and non-workplace pension schemes (subject to an appropriateness assessment).

FSCS coverage

The FCA is consulting on whether retail investors in the LTAF should be covered by the Financial Services Compensation Scheme (FSCS) in the event that an LTAF should fail and the fund manager is unable to pay compensation to investors with a legitimate claim. The FCA has asked for initial views by 10 August. Pending feedback, the FCA might publish a consultation later in the year.


Note that the LTAF cannot currently be included in an Individual Savings Account (ISA), as many industry participants requested in their feedback to the FCA. This is not within the FCA’s gift to resolve, and needs to be dealt with by HMT and HMRC.

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