Millions of consumers will be offered free, tailored financial support from banks and pension providers under sweeping new proposals from the City regulator, in a bid to steer people away from risky online advice and poor money decisions.
The Financial Conduct Authority (FCA) has unveiling plans to overhaul long-standing restrictions that prevent firms from offering personalised financial suggestions unless they conduct full individual assessments — a costly and time-consuming process that leaves most consumers unable to access formal advice.
Under the new “targeted support” regime, firms would be permitted to send “ready-made suggestions” to customers to help them navigate complex financial decisions — from investing cash savings in the stock market to avoiding early depletion of pension pots.
The FCA estimates that only 9 per cent of UK adults currently access conventional financial advice, leaving the vast majority to manage investments and savings without expert guidance. Regulators hope the reforms, which are open for consultation until August, will plug this growing advice gap and stop savers turning to unregulated sources, including social media influencers and AI chatbots.
Sarah Pritchard, executive director at the FCA, described the changes as “once-in-a-generation reforms that will help people navigate their financial lives and give them greater confidence to invest”. She said the proposals represent a “win-win for consumers and firms alike”.
The move comes amid growing concern over the seven million people who hold over £10,000 in cash savings but have not moved into investment markets, potentially missing out on higher returns. Under the new rules, banks and insurers could send prompts encouraging such customers to consider stocks and funds, providing clickable routes to take action.
Financial firms could also give guidance on major retirement decisions, such as whether to choose an annuity or drawdown option. While these are currently considered areas of regulated advice, the new framework would allow companies to offer nudges and suggestions, stopping short of full personalised recommendations.
The cost of full financial advice has long excluded all but the wealthiest. With advisers typically charging 1 to 3 per cent upfront and annual fees of around 2 per cent, access is generally limited to those with more than £200,000 in liquid assets.
Consumer groups have cautiously welcomed the move but warned of potential risks. Holly Mackay, chief executive of financial data platform Boring Money, described the proposals as “highly positive”, estimating that 5.9 million people could benefit. However, she added: “There is a danger that banks see targeted support as meaning targeted sales.”
James Carter, head of platform policy at Fidelity International, said that many savers are already turning to unregulated sources like TikTok influencers or generative AI for advice. “That could result in poor financial decisions. I’m beginning to hear more stories of people using ChatGPT to make conclusive decisions about their financial futures,” he said.
The Association of British Insurers also welcomed the move. Yvonne Braun, its director of long-term savings policy, said: “We know facing complex financial decisions can feel overwhelming, especially in retirement. The FCA’s decision to press ahead with this crucial proposal is very welcome and should be a relief to millions of savers.”
The FCA’s consultation will close on August 29, with a final policy statement due by December. Subject to approval, the first targeted support messages could start reaching consumers as early as April next year.
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FCA to allow millions free financial support in major policy shift