The FCA’s proposals would allow financial firms to offer a new type of help called ‘targeted support’ and make suggestions to groups of consumers with “common characteristics”.
These could include people who may be currently drawing down on their pension unsustainably, are not saving enough for retirement or have excess cash sitting in a current account.
Sarah Pritchard, deputy chief executive of the FCA, said: “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.
“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.”
The FCA proposals aim to address the so-called “advice gap”. According to the FCA’s latest Financial Lives survey, just 9% of adults received financial advice about their pensions or investments in the previous 12 months.
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The FCA said consumers should have access to the help and guidance that they need at a cost they can afford and when they need it to make informed decisions about their financial lives.
Steven Levin, CEO of Quilter, said: “The FCA’s consultation marks a major step in addressing the advice gap. For the first time, there’s a detailed framework for how firms can offer meaningful support to consumers without crossing the line into regulated advice. It proposes a new regulated activity, called targeted support, and rightly acknowledges that the binary choice between generic guidance and full advice is failing too many people.
“The scale of the problem is stark. Just 9% of adults received regulated financial advice last year, despite millions holding investable assets. Many face complex decisions around pensions, inflation and investing – with little or no support. While full, holistic advice remains the gold standard, the FCA’s proposals aim to bridge the growing gulf for those unable or unwilling to access it. Targeted support could deliver scalable, structured help to consumer groups with shared characteristics.”
Jon Cleborne, head of Vanguard for Europe, said: “The draft framework for Targeted Support represents an important milestone in closing the advice gap and bringing meaningful change to how consumers can access and receive advice. As an industry, we have a clear responsibility to seize this moment and ensure these reforms deliver meaningful support and improved outcomes for investors.
“Too many people think investing simply isn’t for them or are put off by what they consider an overly complex investment landscape. These proposals are key to helping more people access the benefits of long-term investing and achieve successful financial outcomes.”
