The United Kingdom’s Financial Conduct Authority (FCA) and government are considering ways to allow the delivery of more advice and support to consumers to support their investment and pension decisions.
“The gap between holistic financial advice that is unaffordable for many, and guidance that is free to access but not personal to the consumer, is simply too vast,” Bim Afolami, economic secretary to the Treasury, said in a Friday (Dec. 8) press release issued by the FCA. “This so-called ‘advice gap’ is excluding people with modest investments, who are looking for support that doesn’t break the bank.”
The FCA and government are now seeking feedback on three proposals that are meant to close that gap, making the support accessible and affordable, according to the release.
These proposals would clarify when firms can give consumers support without giving them regulated financial advice; allow firms to provide support tailored to groups of people who are in similar circumstances; and make it easier for firms to provide affordable personal recommendations to clients who are looking to invest smaller amounts, the release said.
The proposals come at a time when some people struggle without help to make informed decisions on saving and investment, per the release. FCA has found that only 8% of U.K. consumers received “full financial advice” in 2022.
“We want to open the door for more people to get the right advice or support to manage their money at the time they need it and at a cost they can afford,” Sarah Pritchard, executive director of markets and international at the FCA, said in the release. “We’ve already helped firms test drive innovative solutions but we want to go further.”
PYMNTS reported in January that 68% of young people in the U.K. said that a lack of money management skills is a key factor in driving them into debt.
In addition, the number of 16-24-year-olds in the country who have reached out to the Financial Ombudsman Service for help with loans, overdrafts and credit card debt has more than doubled since 2016.
Similarly, 79% of adults who didn’t receive financial education have fallen behind on utility bills or council tax payments over the previous six months.