UK launches biggest financial advice shake-up in more than a decade

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Millions of British savers will be able to access “targeted support” under sweeping new rules to help individuals get better returns on their money, as companies including Hargreaves Lansdown and Vanguard gear up to offer such services.

Unveiling one of the biggest shake-ups of investment advice for a decade, the Financial Conduct Authority said it would allow companies to make generic suggestions to consumers without having to meet all the costly restrictions involved in providing personalised financial advice.

The move, which the FCA called a “once-in-a-generation” change to the UK’s financial advice market, will mean companies can, for example, suggest to groups of people sitting on too much cash that they could put some into shares to get better returns over time.

The development comes more than 10 years after the FCA’s Retail Distribution Review, which aimed to drive up standards of financial advice but ultimately drove up its cost and left many people unable to afford such services in an “advice gap”. 

The FCA said the new regime was designed to help the more than half of British savers who told a recent survey that they wanted more support on how to invest their money.

The regulator estimated about 7mn British adults had more than £10,000 in cash savings and no investments, adding that between 13.5mn and 30.6mn people could benefit from targeted support.

The regulator said it would consult on creating rules for the new activity of targeted support by December, allowing companies to make generic suggestions to groups of similar consumers. 

This would no longer be caught by the onerous requirements involved in providing a “personal recommendation” to customers, including having to carry out detailed suitability assessments.

The FCA also plans to create a second, more targeted, category called “simplified advice” that allows firms to make financial product suggestions to customers based on a quick review of their “essential relevant facts”, without doing a full suitability assessment. 

Dan Olley, chief executive of Hargreaves Lansdown, the UK’s largest “DIY” investment site, said the proposals “will be truly transformational in kick-starting a thriving retail investment culture in the UK”.

“It is clear there are key life moments where too many people are caught in the advice gap, unable to afford financial advice, but needing more guidance than the rules allow,” he said.

According to Barclays, some 13mn of UK adults are holding about £430bn of cash, based on savers who already have more than six months’ income in savings, which could be put to work in investments.

Tom Selby, director of public policy at AJ Bell, said “the existing regulatory framework makes it difficult for firms to offer anything beyond relatively basic information” to customers who are not using a financial adviser.

The FCA said it aimed to authorise targeted support services from April 2026, though its work on simplified advice would take longer. It estimated some 100 companies would launch targeted support services, many of them for free, and said they could cross-subsidise the cost of providing them in the price of other products.

James Daley, head of consumer group Fairer Finance, said the changes were “the right direction of travel — but they must be implemented with adequate safety rails to protect consumers”. He added that customers needed to “have the confidence that these routes won’t be a gateway to exploitation”.

Jon Cleborne, head of Vanguard for Europe said: “These proposals are key to helping more people access the benefits of long-term investing and achieve successful financial outcomes.”

More than 40 per cent of people aged over 40 admit to making almost no financial preparations for retirement, according to Verona Kenny, chief distribution officer of Aberdeen Adviser. “This seems like the best chance in a generation to tackle the problem,” she said.