Can You Pass the Test to Invest in Private Markets? What the SEC and FCA Are Planning

In the UK, private-market access depends on the investment and how it is offered: some high-risk promotions permit restricted, high-net-worth or sophisticated investors, while other products have different checks. The UK has no single accredited-investor status.

On 30 September 2026 the US Securities and Exchange Commission (SEC) asked for comment on letting individuals qualify as accredited investors by passing an exam, without a wealth or income requirement for that proposed route (SEC press release). The US is considering a standard test, while the Financial Conduct Authority (FCA) has proposed giving more weight to knowledge and experience when firms assess elective professional clients.

In brief

• •US: the SEC is considering an accredited investor exam, developed by FINRA and open to any adult. It is still a proposal.
• •UK today: certain high-risk investments may be promoted to retail investors who certify as high net worth, sophisticated or restricted investors; other investments have different routes. Wealth is one route, experience another.
• •UK next: the FCA has proposed scrapping the trade-count and portfolio-size test for professional status in favour of a fuller assessment of expertise.
• •For providers: the UK proposals leave the knowledge judgement with each firm. There is no standard test to rely on.
• •Our view: understanding, affordability and suitability are three separate questions. The rules should test each one separately.

In the US, many private funds and private securities offerings are limited to accredited investors. For individuals, existing routes include wealth and income tests: $1 million of net worth excluding the main home, or income above $200,000.

The SEC now wants views on a route that ignores wealth entirely. The details so far, as summarised by Ropes & Gray and Faegre Drinker:

• •Who could sit it: an adult without affiliation to a financial firm, as described in the SEC notice.
• •Proposed format: approximately 75 multiple-choice questions over approximately two hours, modelled on FINRA's Securities Industry Essentials exam.
• •Proposed validity: a pass would last 10 years.
• •Other routes proposed: holding a CPA, CFA or CFP qualification, or certain FINRA licences (Series 79, or Series 86 and 87).

The existing wealth tests would remain alongside any new route. FINRA has not yet created the exam; the SEC is seeking comment, not offering a qualification today. The format and validity are anticipated details in the SEC exam notice, not final rules.

Private equity, venture capital, private credit and property funds are harder to own than listed shares: money can be locked up for years, fees are layered, valuations are infrequent and there is often no easy way to sell.

Regulators have long limited access to people who are wealthy or professional. The logic is sound as far as it goes: someone with substantial assets can better absorb a loss.

But being able to absorb a loss is not the same as understanding an investment. Someone with £1 million may have no idea what a capital call, carried interest or the J-curve is. Someone with fewer assets may have spent a career analysing private companies.

The UK has no single "accredited investor" label. Promotion eligibility, investor categorisation, a firm's product-access rules and product-level checks are different decisions. The routes below are not interchangeable permissions to buy every private-market investment; experience already counts alongside wealth for some of them.

High-net-worth and sophisticated-investor statements are described in the FCA Handbook (COBS 4.12B); conditions and exclusions depend on the promotion. Under the current rules, the three numeric tests for professional status are: ten sizeable trades a quarter for a year, a portfolio above €500,000, or a year working in finance (Hogan Lovells).

The UK recognises experience as well as wealth, but some promotion routes rely on self-declaration. How firms assess knowledge under other routes varies.

In December 2025 the FCA proposed an overhaul of how firms decide who counts as a professional client (CP25/36). The consultation closed on 2 February 2026. The FCA consultation page had not published final rules as checked on 5 October 2026.

The main proposals, in the FCA consultation itself:

• •Drop the numeric tests. Ten trades a quarter makes little sense for assets held for five to ten years.
• •Strengthen the knowledge assessment. Firms would weigh factors such as work experience, investment history and financial resilience. Tick-box questionnaires and self-certification would not be enough.
• •Add a wealth-only route at £10 million of investable assets, with no knowledge assessment.
• •Require signed, informed consent before anyone gives up retail protections.

The proposed £10 million route is deliberately high, and it would not eliminate the separate qualitative route. And that knowledge would be judged firm by firm, with no common standard.

That gap is where an exam could help.

The two words sound alike but ask different questions.

• •Suitability applies when a firm gives you advice or manages your money for you. Is this investment right for your circumstances, goals and capacity for loss?
• •Appropriateness applies when you invest without advice. Do you have the knowledge and experience to understand the risks?

Take two people looking at the same private equity fund. Investor A has £2 million in liquid assets and has only ever bought listed shares. Investor B has £300,000, has invested in five private funds, and understands capital calls, fee structures and illiquidity.

A wealth test favours Investor A, while a knowledge test favours Investor B. The knowledge test asks the more relevant question: does this person understand what they are getting into?

UK rules already point this way. For certain non-advised offers, including restricted mass-market investments and retail Long-Term Asset Funds, firms must assess appropriateness under applicable rules. Requirements depend on the product, promotion and service; an eligibility statement alone is not enough.

The FCA accepts the test is uneven. In a December 2025 discussion paper it said standards are inconsistent for the same investment, and for different investments with similar risks (DP25/3). It asked whether the test works. Responses closed on 6 March 2026, and as checked on 5 October 2026, the FCA discussion page had not published a response or proposed changes.

The Financial Services Consumer Panel responded that a basic test should be consistent across all firms, with further testing as products become more complex. In effect, the Panel is describing a licence.

A driving licence depends on showing you can operate a car safely, whatever your bank balance. The SEC's exam applies the same idea to investing: qualify because you are wealthy, because you hold a professional qualification, or because you can demonstrate what you know.

The analogy has limits, and so does the exam.

• •Judgement. A multiple-choice test can show you know what a capital call is. It cannot show whether a fund's capital calls would leave you short of cash.
• •Breadth. Understanding venture capital does not mean understanding private credit or infrastructure.
• •Affordability. Passing an exam says nothing about whether you can live with a 50% loss.

A single "private markets licence" risks becoming one more blunt proxy. A tiered approach would work better:

• •Core knowledge. Illiquidity, diversification, valuation, fees, fund structures and loss of capital.
• •Asset-class knowledge. A further module for venture capital, private equity, private credit or property.
• •Personal fit. A separate check on your finances, goals and liquidity needs before each investment.

• •Nothing changes yet. UK firms must follow FCA rules, so a US exam pass would not change how a UK platform treats you.
• •Expect more questions. Under the FCA's proposals a firm would need evidence of what you know. A ticked box would not be enough for professional status.
• •Keep a record. Note the private investments you have made, with dates and amounts, and any relevant work experience. It is the evidence firms will ask for.
• •Think before opting up. Professional status means giving up retail protections. The FCA wants signed, informed consent for exactly that reason.
• •You may not need to. For some restricted mass-market investment promotions, the restricted-investor statement may be available if you satisfy its 10% net-assets conditions. This is a promotion category, not a pass for all private investments.

• •The knowledge judgement sits with you. The FCA's proposed route to professional status relies on each firm's own assessment, with no standard test to lean on. In the US, FINRA would build a way for issuers to verify an exam pass (SEC exam notice).
• •Your back book is in scope. Firms would have one year from the new rules taking effect to re-check every existing elective professional client.
• •Marketing is constrained. Firms could raise opting up only with clients they reasonably believe would qualify, and could not promote professional-only products to them first (FCA CP25/36).
• •Appropriateness tests are under review. The FCA has already said standards are inconsistent. A test that only checks vocabulary is exposed if the FCA sets a common standard.
• •Timing is open. Final rules on professional client status are still awaited. The SEC exam has no launch date.

We think access to private markets should be earned by understanding, with financial safeguards around it. Wealth alone should not be enough, and nor should knowledge alone.

Someone who understands private equity but cannot withstand a large loss should not put most of their savings into it. Someone who has built up wealth should not be treated as sophisticated by default.

A good framework would ask three questions and keep them apart:

• •Can you understand it? Knowledge and experience of comparable investments.
• •Can you afford it? Capacity to bear the loss and the lock-up.
• •Is it right for you? Fit with your goals and circumstances.

Neither the SEC's exam nor the FCA's reforms is final. But both regulators are giving more weight to what investors know, and we think that is the right direction.

Yes, within limits. Listed private equity investment trusts are open to anyone. For unlisted shares, peer-to-peer loans and Long-Term Asset Funds, access depends on the specific product, how it is promoted, its investor category and any required appropriateness assessment. No one certificate grants access to all of them.

It is a US term for someone allowed to buy private securities. Individuals usually qualify with $1 million of net worth excluding their home, or income above $200,000. The UK has no direct equivalent.

No. UK firms assess knowledge themselves, and there is no standard test. The FCA's 2025 proposals would strengthen those assessments but do not include an exam.

There is no date. The SEC asked for comment on 30 September 2026, and FINRA has yet to develop the exam.

Income of £100,000 or more in the last financial year, or net assets of £250,000 or more. Your main home and pension do not count.