The Financial Conduct Authority (FCA) have announced what it describes as ‘once in a generation’ reforms to the advice firms are able to provide around pensions, investments, and savings.
In an effort to tackle the ‘advice gap’, the FCA have announced proposals which would allow firms to offer a new type of help called ‘targeted support’ and make suggestions to ‘groups of consumers with common characteristics’. They use examples including people who are drawing down on their pension unsustainably, sitting on large amounts of cash, or are not retirement planning effectively. The FCA say the proposals support growth by releasing capital for investment and innovation.
Alongside the ‘targeted advice’ proposals announced today, the FCA have also set out plans to reform the framework for simplified advice. The regulators said it ‘wants to see a thriving and trusted market for full financial advice, simplified advice, targeted support and guidance.’
The ‘advice gap’ is stark according to the FCA. Fewer than one in ten adults received financial advice about their pensions or investments over the previous 12 months, according to the FCA’s latest Financial Lives survey (FLS 2024). In many cases people simply feel uniformed, or overwhelmed by the number of options available.
Over half of savers (54%) said they would welcome ‘a lot’ or ‘a little help’ and support when they need to decide whether to invest excess savings. Two thirds (62%) of existing investors would welcome more help and support when it comes to managing their investments, and 68% of existing investors would welcome more help and support when reviewing investments to make sure they are right for them. There are about 7 million adults in the UK with £10,000 or more in cash savings who may be missing out on the benefits of investing throughout their lives.
“We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement.”
said Sarah Pritchard, Deputy Chief Executive of the FCA.
“These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike.”
An eight week consultation period now begins on the proposals.
