FCA announces ‘targeted support’ to help people take control of their finances

 

FCA announces ‘once-in-a-generation reform’ to support those on the journey to financial independence – by Christian Leeming

 

It is now more than twelve years since DIY Investor published ‘In praise of the Retail Distribution Review‘ and ever since it has remained in the vanguard of the movement to improve financial literacy and encourage financial self-reliance.

Robo-advice may not have delivered the silver bullet predicted at the time, but a measure of the success that has been had in democratising investing and increasing financial engagement can be seen in the stellar growth that has occured in the number of people taking personal financial control; lockdown indubitably played a part as people turned to DIY investing like never before – ‘Coronavirus lockdown fuels spike in DIY investing‘ ‘Lockdown 2.0: Increasing numbers take personal financial responsibility and turn to DIY investing‘

In ‘DIY investing comes of age‘ I posited that using a six foot merkin as an advertising hook, and the raft of TV ads for brokers and platforms, indicated that DIY investing had entered the mainstream; I also cautioned of gamification, crypto and the various meme stocks that were soaring/tanking at the time.

DIY Investor firmly believes in the power of the crowd, and has featured a series of ‘someone-like-you’ articles featuring real investors with real money.

However, there remained a grey area that sat somewhere between financial advice and DIY investing, and brokers and platforms delivered a range of solutions according to their interpretation of what constituted advice. Where do you get a financial healthcheck – a portfolio MOT – one-off advice in exceptional circumstances, or perhaps a ‘house view’ on an individual stock that is hard to read.

Now it appears the financial ombudsman – the Financial Conduct Authority – has taken heed and announced proposals for a new type of help called ‘targeted support’ to help millions more people manage their money, with support on pensions and investments.

In one of the biggest shake-ups of investment advice for a decade, the proposals would allow financial firms to make suggestions to groups of consumers with “common characteristics” – someone like you – including people currently drawing down on their pension unsustainably, not saving enough for retirement or with excess cash sitting in a current account.
The FCA said the new regime was designed to help the more than half of British savers who told a recent survey that they wanted more support on how to invest their money; it estimated that 7m British adults had more than £10,000 in cash savings and no investments, adding that between 13.5m and 30.6m people could benefit from targeted support

The FCA also plans to create a second, more targeted category called “simplified advice” that allows firms to make financial product suggestions to customers based on a quick review of their “essential relevant facts”, without doing a full suitability assessment.

 

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.”

 

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, and these proposals aim to address the so-called “advice gap”.

It 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.

 

Here is the FCA announcement, followed by expert reaction from various sectors of the industry:

 

Once-in-a-generation advice changes to help millions navigate their financial lives

 

Millions more people could get help navigating their financial lives with support on pensions and investments, under proposals announced today by the Financial Conduct Authority

The FCA’s proposals would allow 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, not saving enough for retirement or who have excess cash sitting in a current account.

The changes, which have inbuilt protections for consumers, also support growth by enabling increased investment and innovation.

 

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.”

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.

This advice gap is stark. Just 9% of adults received financial advice about their pensions or investments in the previous 12 months, according to the FCA’s latest Financial Lives survey (FLS 2024).

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.

There are about 7 million adults in the UK with £10,000 or more in cash savings who may be missing out on the benefits of investing throughout their lives.

The FCA has worked in a smarter way to carry out this work, running its very first 6 week policy sprint, where firms designed consumer journeys to help design the rules in the consultation, with support from consumer representatives and other members of the regulatory family. Detailed consumer testing has also been completed, published alongside the consultation.

The aim of this detailed sprint, and consumer testing, has been to help then accelerate the period for consultation, which is now open for 8 weeks.

The FCA is also working with the government to help resolve issues that might prevent firms communicating with consumers, with issues having been identified early through the policy sprint.

The FCA committed to support growth in its strategy. These reforms are among almost 50 initiatives the FCA set out in a letter to the Prime Minister in January 2025, which the FCA is delivering against this year.

 

The FCA’s Financial Lives 2024 survey showed three in eight adults (37% or 20.3m) used information or guidance in the 12 months to May 2024. Consumers will have used one or more sources such as:

 

• 25% said they received guidance from regulated firms or statutory bodies.
• 23% said they received guidance from other professional bodies such as their workplace, private sector money advice websites and traditional media, to help them with decisions about investments, saving into a pension or retirement planning.

 

Independent research commissioned by the FCA showed that more than half of savers (54%) would welcome ‘a lot’ or ‘a little help’ and support when they need to decide whether to invest excess savings. In addition,62% of existing investors would welcome more help and support when it comes to managing theirinvestments, and 68% of existing investors would welcome more help and support when reviewing investments to make sure they are right for them. Retail Investments Consumer Research,Thinks Insight, 2025.

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.”

 

 

Brian Byrnes, Head of Personal Finance at Moneybox said:

 

“These proposals for Targeted Support mark a major milestone in the Advice Guidance Boundary Review — and they couldn’t come at a more critical time.

With just 9% of UK adults receiving regulated financial advice in the past year, and around 6.5 million people (12%) experiencing low financial capability, it’s clear that millions stand to benefit from better, more accessible guidance.

At Moneybox, we believe that financial confidence is the foundation for long-term wealth building. Our recent Financial Confidence Index highlights this clearly: people who feel confident managing their money are far more likely to save, invest, and plan for the future earlier in life — regardless of income. In fact, financially confident individuals report a net worth £86,000 higher on average than those who lack confidence. Our analysts have found that if we could boost confidence levels nationwide, UK personal net wealth could grow by as much as £142 billion.

That’s why these new Targeted Support proposals from the FCA and HMT are so important. They have the potential to help providers like Moneybox deliver personalised guidance at scale — empowering people to make smart financial decisions with greater confidence, throughout life..

As the Government works to foster a stronger investing culture in the UK, it must start with helping people build solid financial foundations. The FCA now needs to provide clarity on implementation, ensure appropriate safeguards, and maintain a sharp focus on helping people engage meaningfully with their long-term finances.

There’s a great deal of exciting progress underway — from Targeted Support and growing momentum behind the Pensions Dashboard, to the much-anticipated review of the UK’s ISA regime and the next phase of the Pensions Investment Review. Each of these reforms has the potential to transform how people engage with their money. But to deliver meaningful impact, they must be aligned and guided by a single, clear priority: improving financial confidence and outcomes for people across the UK.

The coming months present a rare opportunity to revolutionise the way people are supported to manage their finances and realise their full financial potential in life. If we harness this momentum we have the potential to build a truly inclusive, empowered, and financially resilient society for generations to come.”

 
Callum Pirie, a Director in Houlihan Lokey’s FinTech Group, said:
“The FCA’s announcement represents a positive step towards addressing the long-standing advice gap in the UK.
Many of the larger advice providers have struggled to serve smaller client portfolios profitably, given the high cost and regulatory burden associated with delivering personalised advice—despite these clients having the same fundamental need for guidance.

The proposed changes will create new avenues for existing providers to serve a broader segment of the market with an appropriate level of support at a lower cost.

This shift could also drive increased M&A activity, particularly among firms with smaller average client portfolios. Historically, these books have been seen as less attractive acquisition opportunities for larger platforms. Now, with a more scalable and commercially viable service model on the table, we expect growing interest in consolidating these segments.
We could well see a ‘land grab’ for smaller client books, especially from firms that are equipped to offer digitally enabled, lower-touch advice to clients who are comfortable with less traditional delivery models. Those able to scale such propositions quickly will be best placed to capitalise on the opportunity.”
 

Claire Exley, head of financial advice and guidance at J.P. Morgan owned digital wealth manager, Nutmeg said: “The advice gap in the UK isn’t anything new. An unintended consequence of the Retail Distribution Review at the end of 2012 saw the gap grow steadily between the number of consumers wanting to speak to a professional about their finances, and the number of qualified advisers willing to take them on.

“In the years since, many providers have approached guidance with caution due to the lack of clarity over what constituted advice and what was considered guidance – a concern for overstepping, has meant many providers didn’t step at all.
For consumers, we often find that people are unaware of the types of help with finances that are available, particularly financial guidance which is often free of charge. This can be compounded by a misconception that you will only benefit if you have extremely complex needs or hundreds of thousands of pounds. The reality is people require different financial guidance and advice at different stages of their lives: you may want to give your pension and retirement planning a boost or understand the types of investments that are available and how they could help achieve different financial goals.
“Targeted support is a much needed and welcomed first step in closing the advice gap. We know clients are looking for guidance that is relevant to them, their situation at the time it’s right for them. ‘People like you’ scenarios will hopefully help consumers to build confidence in their own decision making – we’re aware that often people are looking for reassurance that they’ve arrived at the “right” decision – rather than being told what the decision should be.

 

 

Chira Barua, CEO of Scottish Widows and CEO of Insurance, Pensions & Investments at Lloyds Banking Group, said: “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. As the UK’s biggest digital bank and the only integrated bank and insurer, Lloyds is passionate about helping our 28m customers bridge the advice gap. The FCA’s work to refine the advice rules is a material stepping stone in building a more inclusive financial landscape in the UK.”