The class name &1 is not permitted for the class type you have chosen

What causes this issue?

Naming conventions for classes:
For a persistent class, you must use the prefix 'CL_' or the namespace
plus the prefix 'CL_' ( z.B. 'ZCL' or '/NAMESPACE/CL_' ).
For an exception class, you must use the prefix 'CX_' or the namespace
plus the prefix 'CX_' ( z.B. 'ZCX' or '/NAMESPACE/CX_' ).

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

System Response

How to fix this error?

Procedure for System Administrators

Error message extract from SAP system. Copyright SAP SE.