Proposals to improve people’s access to financial advice and help them to invest with confidence have been unveiled by the Financial Conduct Authority (FCA).
The moves, part of the City regulator’s consumer investment strategy, follow its Financial Lives survey, which found that 4.2 million people in the UK held more than £10,000 in cash and are open to investing some of it.
While keeping a cash buffer is “a sensible way of dealing with unexpected expenses”, consumers with significant amounts of excess cash may be damaging their financial position as inflation reduces the value of their savings, the watchdog said.
Under its proposals, the regulator is considering limiting the possible investments that advisers can recommend to a set of mainstream investments within stocks and shares ISAs, excluding high-risk products.
It also wants to reduce the qualification requirements for firms to reflect the lower risk of this narrow scope of advice, focusing on only the necessary technical and regulatory understanding.
The proposals would allow advice fees to be paid in instalments so that customers are not burdened by large upfront bills. “It’s part of our work to deliver a consumer investment market where people can readily access support, and firms aren’t deterred from providing it,” said executive director of markets Sarah Pritchard.
Two more updates from the FCA:
- It has published a consultation on standards for operators of pension dashboards, designed to provide consumers with easier access to information about their pension savings. It has set out its approach to supervision and enforcement, including fees, regulatory reporting, record keeping, prudential requirements and conduct rules. Operators will be able to offer savers additional services that improve engagement with pensions, provided they meet rigorous conduct standards. These services could include “robo-advice”, calculators and other similar tools.
- It has devised final rules requiring non-workplace pension providers to offer consumers a default investment option to support those who are struggling to make a choice. Under the rules, savers will be warned about the risk of inflation eroding the value of significant and sustained levels of cash holdings. Firms will have a year in which to implement these rules, but given the current levels of inflation, the watchdog is encouraging providers to send cash warnings now.
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