City watchdog takes on advice gap to unlock growth
The Financial Conduct Authority (FCA) has launched a new form of financial help dubbed ‘targeted support’ in a bid to encourage greater consumer participation in financial markets and unlock more investment-led growth.
The City regulator will target consumers with common financial characteristics, such as unsustainable pension drawdown, inadequate retirement savings and excess cash not being invested.
The renewed attention on financial inclusion and investment follows the regulator’s financial lives survey revealing just nine per cent of adults receive financial advice about pensions or investments.
One in four of those who did not receive advice hold £10,000 or more in cash but said they do not invest due to lack of knowledge.
The FCA said the changes will help support the government mission for economic growth through increased investment and innovation.
FCA hail ‘once-in-a-generation’ reforms
Sarah Pritchard, deputy chief executive of the FCA, said: “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.”
The efforts for economic growth follow the regulator’s letter filled with 50 points for how it can help support the government’s mission.
The regulator’s chief executive Nikhil Rathi previously told Morning Wire: “We have an opportunity in the UK… to really put our effort and focus behind moving fast. Agility is going to be critical for us – and it’s a critical competitive advantage if we get it right.”
An estimated seven million adults in the UK possess more than £10,000 in cash savings but miss out “on the benefits of investing,” according to the FCA.
The push on financial advice has been welcomed by the investment industry.
Chira Barua, chef executive of Scottish Widows, said: “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.”
Barua added: “The FCA’s work to refine the advice rules are a material stepping stone in building a more inclusive financial landscape in the UK.”
Meanwhile, James Heal, director of public policy at St. James’s Place, said: “We are moving closer to a new form of support that will help consumers make better investment decisions.
“Expanding access to advice is key to closing the UK’s advice gap and we recognise the need to do more for those currently without access”
The FCA ran its first 6-week policy sprint, working with firms, consumer groups, and regulators to design the proposed rules. A consultation on the proposals will now be open for eight weeks.