Millions more consumers could benefit from help with their pensions and investments under sweeping new proposals published by the Financial Conduct Authority, aimed at making financial guidance more accessible and affordable.

In a move described by the regulator as “once-in-a-generation” reform, the FCA has outlined plans for a new form of consumer-facing guidance known as “targeted support”.

This would allow firms to offer personalised suggestions to groups of consumers with similar characteristics, such as those withdrawing unsustainably from their pensions, under-saving for retirement, or holding large amounts of idle cash.

With protections built into the proposals, the FCA believes the changes will not only support better decision-making by consumers but also stimulate innovation and investment in the financial advice sector.

AID LONG-TERM PLANNING

“We want to help consumers navigate their financial lives and plan for the long term,” said Sarah Pritchard, deputy chief executive of the FCA. “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 reforms aim to reduce the so-called “advice gap”, which the regulator’s latest Financial Lives Survey found to be strikingly wide. Just 9% of adults received financial advice about pensions or investments in the past year. Among those with more than £10,000 in cash savings, a quarter said they do not invest because of a lack of knowledge, while 12% felt overwhelmed by the number of options, and 8% cited a need for more support before investing.

The regulator estimates around seven million UK adults with significant cash holdings could be missing out on long-term investment growth, highlighting the urgency of expanding access to effective financial guidance.

The consultation on targeted support, open for eight weeks, follows the FCA’s first-ever “policy sprint” – an accelerated regulatory design process involving financial firms, consumer groups and government stakeholders. This process helped shape the proposals by simulating real-world consumer journeys and testing the effectiveness of proposed interventions.

FCA PRIORITIES

The initiative is one of nearly 50 priorities the FCA committed to in a letter to the prime minister earlier this year. Alongside targeted support, the regulator has also published proposals to overhaul the simplified advice framework, signalling a broader shift towards a more layered and accessible advice model.

Ian McKenna, founder of the Financial Technology Research Centre, welcomed the move but emphasised the need to address the root causes of previous failures. “This initiative can only work if it is accompanied by a substantial revision to the remit of the financial ombudsman service,” he said.

“There have been many attempts by the FCA and their predecessors to provide simpler advice services, but historically these have always failed because FOS refused to cooperate.”

McKenna argued that while advisers are held to high standards, the resulting increase in professionalism has made traditional financial advice unaffordable for the majority of consumers.

LIMITATIONS OF DIGITAL ADVICE PLATFORMS

He also stressed the importance of recognising the limitations of digital advice platforms, cautioning against letting the pursuit of perfection obstruct the delivery of broadly beneficial outcomes.

EV managing director Chet Velani described the FCA’s proposals as “much anticipated” and called for a consistent and integrated approach across different types of support. “Targeted support, by design, is still guidance and not a personalised recommendation,” he said.

“Our view is that streamlined (or digital-hybrid advice) offers a fantastic opportunity to provide consumers with a low-cost personalised recommendation, for those where targeted support doesn’t go far enough.”

Velani added that an integrated technology stack will be crucial to ensure consistency across all forms of advice and guidance. “The future of financial wellbeing is in sight,” he said.