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To help Hargreaves Lansdown and Vanguard Gear provide such services, millions of UK savers will have access to “target support” to help individuals get better returns.
Announced one of the biggest shakeups of investment advice over the decade, Financial Conduct Authority said companies can make general suggestions to consumers without meeting all the costly restrictions that come with providing personalized financial advice.
This move, which the FCA calls “a generation,” changes to the UK financial advice market, meaning that, for example, can be suggested that companies have too much cash in cash that can put their shares in order to get better returns over time.
This development has been more than a decade since FCA’s retail distribution review. This was intended to promote the standards of financial advice, but ultimately increased costs and many people could not afford such services in the “advice gap.”
The FCA said the new administration is designed to support more than half of UK savers who said in a recent survey they want more support in how they invest their money.
Regulators estimate that around 7 million British adults have earned more than £10,000 in cash savings and have not invested, adding that between 13.5 million and 30.6 million people can benefit from Target Support.
Regulators discussed the creation of rules for new targeted support activities by December, saying businesses could make general suggestions to similar groups of consumers.
This avoids getting caught up in the troublesome requirements that come with providing “personal recommendations” to customers, such as conducting a detailed conformance assessment.
Additionally, the FCA plans to create a second, more targeted category called “simplified advice,” which allows companies to propose financial products to customers based on a brief review of “essentially relevant facts,” without performing a full suitability assessment.
Dan Olley, CEO of Hargreaves Lansdown, the UK’s largest “DIY” investment site, said the proposal was “really transformative in kickstarting the UK’s thriving retail investment culture.”
“It’s clear that there are important moments in life where you get caught up in the advice gap and you can’t get financial advice, but you need more guidance than the rules allow,” he said.
According to Barclays, approximately 13 million UK adults hold about £430 billion in cash, based on savers with savings of more than six months.
“The existing regulatory framework makes it difficult for companies to provide something beyond relatively basic information to customers who do not use financial advisors,” said Tom Selby, director of public policy at AJ Bell.
The FCA said its aim to approve Target Support Services from April 2026, but the work on simplified advice will take time. Approximately 100 companies have launched target support services, many of which have estimated they will launch support services for free, and said they can cross-subride the costs of offering them at the prices of other products.
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James Daley, head of Consumer Group Fairer Finance, said the change was “in the right direction for travel, but it would need to be implemented with appropriate safety rails to protect consumers.” He added that customers need to “be confident that these routes will not be the gateway to exploitation.”
“We’ve seen a lot of effort and we’ve seen you in the world,” said John Cleborn, head of Vanguard in Europe. “These proposals are key to helping more people access the benefits of long-term investments and achieve successful financial outcomes.”
According to Verona Kenny, Chief Distribution Officer at Aberdeen Advisor, more than 40% of people over the age of 40 admit that they have little financial preparation for retirement. “This seems like a generation’s best chance to tackle a problem,” she said.
