‘Targeted support’ for people unable to pay for financial advice launched by FCA

Savers who are unable to afford full financial advice will soon be able to access “targeted support” from financial services providers thanks to new rules from the City regulator, the Financial Conduct Authority (FCA).

The FCA says savers will be able to access more support for their pensions and investments without having to pay for costly financial advice in future. It is calling this help ‘targeted support’.

Targeted support will allow providers to make suggestions to groups of savers with common characteristics. 

These could include people who may be currently drawing down on their pension unsustainably, not saving enough for retirement or who have excess cash sitting in a current account. 

Sarah Pritchard, deputy chief executive of the FCA, comments:  “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.”

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Advice gap vs targeted support

The FCA says these reforms will help to close the so-called ‘advice gap’.

This gap exists effectively because financial advice firms are unable to economically provide their services to customers who fall below a certain net-worth threshold. 

This leaves potentially millions of people who need some form of financial advice unable to access it in order to ensure better financial outcomes for their financial, and particularly retirement, plans.

Chira Barua, chief executive of Scottish Widows, comments: “More than 90% of consumers in the UK today cannot access regulated advice and get the help they need to make informed decisions about their futures. 

“The FCA’s work to refine the advice rules is a material stepping stone in building a more inclusive financial landscape in the UK.”

Dan Olley, chief executive at Hargreaves Lansdown explains how it will help investment platforms better help customers.

“For the first time, we will be able to provide targeted support that is much more relevant for each of our clients,” he says. “We will be able to tailor conversations and the digital experience to where they are in their investing journey, helping them see the potential of certain choices, which could have large positive impacts on their financial outcomes over the long term. 

“We can also be even more present at those critical life stages such as the move into retirement, where we will be able to guide people more effectively in how to make the most of their accumulated assets to ensure they realise the financial freedom they have saved and invested for.

“With the changes announced today, supporting people across the UK to begin their investing journey, and then being there for all the subsequent moments that matter, will be so much easier for the industry and much more effective for clients.

“Whether starting off on the investing journey or accelerating the building of a nest egg for retirement, these changes will help so many more people find their financial freedom.”