The FCA’s proposals would allow firms to offer a new type of help called ‘targeted support’ and make suggestions to groups of consumers with common characteristics. These could include people who may be currently drawing down on their pension unsustainably, not saving enough for retirement or who have excess cash sitting in a current account.

The changes, which have inbuilt protections for consumers, also support growth by enabling increased investment and innovation.

Sarah Pritchard, deputy chief executive of the FCA, said: “We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement.

“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.”

Chancellor of the Exchequer, Rachel Reeves, said: “Too many people are missing out on the support they need to build a more secure financial future for themselves and their families.

“Today’s reforms will make a real difference to help working people make better long-term financial decisions, ultimately putting more money in their pockets as part of our Plan for Change.”

These reforms should set the framework for the next 20-30 years, to support consumers now as well as future generations. 

The FCA wants to see a thriving and trusted market for full financial advice, simplified advice, targeted support and guidance. Alongside today’s proposals for targeted support, the FCA has set out plans to reform the framework for simplified advice. 

Consumer access to a choice of guidance, targeted support, simplified advice and full financial advice should help reduce the so-called ‘advice gap’. This supports our ambition that consumers should have access to the help and guidance that they need, at a cost they can afford, when they need it, to make informed decisions about their financial lives. 

This advice gap is stark. Just 9% of adults received financial advice about their pensions or investments in the previous 12 months, according to the FCA’s latest Financial Lives survey.

Of those who did not receive financial advice, but hold £10,000 or more in cash savings, 24% said they don’t invest because they don’t know enough about it, 12% because they feel overwhelmed by the number of options available, and 8% said they would need more support before they invest. 

There are about seven million adults in the UK with £10,000 or more in cash savings who may be missing out on the benefits of investing throughout their lives. 

The FCA has worked in a smarter way to carry out this work, running its very first six-week policy sprint, where firms designed consumer journeys to help design the rules in the consultation, with support from consumer representatives and other members of the regulatory family. Detailed consumer testing has also been completed, published alongside the consultation. 

The aim of this detailed sprint, and consumer testing, has been to help accelerate the consultation, which is now open for eight weeks.

The FCA is also working with government to help resolve issues that might prevent firms communicating with consumers, with issues identified early through the policy sprint. 

The FCA committed to support growth in its strategy. These reforms are among almost 50 initiatives set out in a letter to the Prime Minister in January 2025, which the FCA is delivering against this year.

Tom Selby, director of public policy at AJ Bell, said: “Regulated advice remains the gold standard but the proposal to create a new ‘targeted support’ regime allowing more personal help to be provided for free could be a gamechanger for consumers, potentially helping millions of savers make better-informed decisions about their finances.

“Full financial advice is an incredibly valuable service but isn’t an option for everyone. Research published this week from the Lang Cat shows that new clients typically approach a financial adviser with an investment portfolio of over £400,000 and the average advised investor is aged around 60.

“Clearly that leaves a significant advice gap and the regulator has identified millions of people with investible assets who are crying out for help making decisions, but many cannot afford advice or prefer to manage their own investments on a DIY basis.

“It is therefore vital those who do not receive advice still get some help to make sound financial choices. The FCA and Treasury deserve credit for tackling this difficult problem head-on and exploring solutions to both improve guidance and make advice more accessible.”