Auto Amazon Links: No products found. Blocked by captcha.
A new initiative is set to provide enhanced financial support for individuals seeking guidance to invest their money, particularly those who might otherwise rely on family, friends, or social media influencers for advice. Beginning in April, authorised banks and financial institutions will be permitted by the City regulator to offer targeted recommendations on investments and pensions. This assistance will be based on the financial behaviors of people in similar demographic groups, although it will not amount to fully personalised financial advice, which remains the domain of authorised financial advisers and typically involves a fee.
Research conducted by the Financial Conduct Authority (FCA) found that nearly 20% of people currently depend on informal sources such as family or social media to assist with financial decision-making. Sarah Pritchard, deputy chief executive of the FCA, described the upcoming regulatory changes as “game changing,” stating that they would enable millions to receive additional support for improved financial choices. She emphasized that while investing is not suitable for everyone, the new arrangements could also increase public confidence in investing, noting that UK residents traditionally invest less than those in the EU or the United States.
The FCA highlights that a significant portion of the population faces barriers to investing; one in ten people have no cash savings, and 21% possess less than £1,000 for emergency funds. Nevertheless, data suggests approximately seven million adults with at least £10,000 in savings might benefit from better returns through investments. While investments carry risks, including the potential loss of value, holding cash can diminish purchasing power due to inflation. Many potential investors refrain from entering the market due to uncertainty or feeling overwhelmed, with only 9% receiving regulated financial advice on pensions and investments in the year ending May 2024. The targeted support is designed to fill the space between very general advice and paid-for individual consultations, enabling providers to offer practical tips, such as how to invest a substantial cash sum or diversify investments to lower risk.
This form of assistance will not be personalised or costly. Pritchard clarified on BBC’s Today programme that the guidance will be tailored based on groups’ characteristics rather than individualised plans, and it will be offered free of charge since commissions are banned under the new rules. Yvonne Braun, policy director at the Association of British Insurers, welcomed the move, describing it as a major advance in closing the financial advice gap and empowering millions.
Consumer protection will remain a priority under these new regulations. Firms participating in the scheme, including banks, building societies, investment platforms, and digital wallet providers, must obtain prior authorisation and demonstrate that their recommendations are appropriate and beneficial to customers. Special attention will be given to any vulnerabilities among clients, and consumers will retain the right to escalate any complaints to the independent financial ombudsman. Additionally, forthcoming adjustments will encourage people to make more informed pension decisions. Although the new rules require legislative approval, government officials have expressed a strong commitment to promoting investment as a driver for economic growth. This objective partly influenced Chancellor Rachel Reeves’s decision to reduce the annual Individual Savings Account (ISA) allowance from £20,000 to £12,000 for those under 65, effective from April 2027. Separately, the FCA has introduced a “firm checker” tool aimed at preventing investment fraud, helping individuals avoid scams
Read the full article from The BBC here: Read More
Auto Amazon Links: No products found. Blocked by captcha.