New FCA rules aim to deliver targeted support

The Financial Conduct Authority (FCA) has announced that it is developing new rules aimed at helping consumers move their savings from cash into shares, with the regulator looking to reduce the ‘advice gap.’

The proposed rules would allow financial firms to offer targeted support, replacing the current system that distinguishes between ‘guidance’ and ‘financial advice’. 

These reforms should set the framework for the next 20-30 years to support consumers now as well as future generations.  

The FCA wants to see a thriving and trusted market for full financial advice, simplified advice, targeted support and guidance. Alongside today’s proposals for targeted support, the FCA has set out plans to reform the framework for simplified advice.  

Consumer access to a choice of guidance, targeted support, simplified advice and full financial advice should help reduce the so-called “advice gap”. This supports our ambition that consumers should have access to the help and guidance that they need, at a cost they can afford, when they need it, to make informed decisions about their financial lives.  

The data shows that just 9% of adults received financial advice about their pensions or investments in the previous 12 months. Of those who did not receive financial advice, but hold £10,000 or more in cash savings, 24% said they don’t invest because they don’t know enough about it, 12% because they feel overwhelmed by the number of options available, and 8% said they would need more support before they invest.  

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.”