The Financial Conduct Authority is proposing rules to enable banks and other firms to offer a new category of regulated assistance to help UK consumers make better decisions about pensions and investments.
As part of a wider consultation set to close in August, the FCA is proposing new “targeted support” rules that aims to address the “advice gap” among consumers, the regulator announced on Monday.
It comes after the FCA found that only 9 per cent of adults received regulated advice on pensions or investments in the past year, according to its Financial Lives 2024 survey.
Under the proposals, firms could provide advice and product suggestions to groups of consumers sharing common characteristics, such as those at risk of unsustainable pension drawdown or holding large amounts of cash savings, without triggering the full regulatory burden typically associated with personalised financial advice.
Instead, firms could offer suggestions to consumer groups under a simpler, outcomes-based framework with fewer disclosure requirements.
Firms must define both the “situation” and “consumer segment”, with support in line with Consumer Duty standards.
Targeted support would fall under a new regulatory category to be created by amending the Regulated Activities Order, with the government expected to formally consult on the change.
“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,” Sarah Pritchard, the FCA’s deputy chief executive said in a statement on Monday.
The regulator received strong interest from banks about the rules, The Banker understands.
“More than 90 per cent of consumers in the UK today cannot access regulated advice and get the help they need to make informed decisions about their futures,” Chira Barua, chief executive of Scottish Widows and of insurance, pensions and investments at Lloyds Banking Group, said in a statement on Monday.
For banks and building societies, the FCA noted the opportunity to advise customers currently holding £10,000 or more in idle cash savings to appropriate investment products.
The reforms should set the framework for the next 20-30 years, the FCA said.
There have been growing concerns about consumers increasingly turning to online financial influencers — known as “finfluencers” — for financial advice, but the FCA did not openly say if these concerns are the driving force behind the initiative.
“These proposals are an important milestone to make financial support more accessible, timely and aligned with consumer needs,” said Jonathan Lipkin, director for policy, strategy and innovation, at the Investment Association.
“The combination of targeted support, simplified advice, alongside well-designed retail disclosure, which empowers consumers to take informed decisions, can enable our industry to better serve the UK’s retail investment and pensions’ markets, boost financial inclusion and support better long-term outcomes for customers,” Lipkin said.
The FCA’s consultation closes on August 29 and the regulator aims to publish final rules by the end of 2025.