The FCA has announced its upcoming plans for addressing the advice gap in pensions and investments, emphasising the importance of accessible and affordable support.
- In December 2023, initial proposals were put forward to provide easier access to financial advice.
- The upcoming consultations in 2024 focus on providing targeted support specifically in pensions.
- The FCA highlights the need to support consumers with defined contribution pensions as they make complex financial decisions.
- Investment adviser firms, particularly smaller ones, will be engaged in discussions to assess their capability to offer simplified advice.
The FCA has outlined a strategic approach to bridge the advice gap in the financial sector, primarily targeting the areas of pensions and retail investments. This initiative revolves around the Advice Guidance Boundary Review, aiming to offer clearer and more cost-effective guidance to consumers.
In 2023, initial proposals were introduced to ensure that individuals can access necessary advice without incurring high costs. The focus is on addressing financial decisions that many find challenging, especially as they pertain to long-term investments and pensions.
The FCA has set its sights on December 2024 for the first consultation, which will concentrate on pensions. This step is crucial as many consumers rely on defined contribution pension plans and, as highlighted by the FCA, need support in making informed decisions about their retirement funds.
The anticipated consultations are set to dive deeper into how firms can deliver this support effectively. With automatic enrolment increasing the use of defined contribution pensions, there is a heightened demand for accessible advice.
By mid-2025, the FCA intends to present comprehensive proposals that will expand beyond pensions and explore broader investment support, offering draft rules covering consumer needs.
Over 85% of investment adviser firms employ only one to five advisers. Recognising this, the FCA plans to engage with these smaller firms through roundtables set for 2025 to explore their potential role in providing simplified financial advice.
The FCA maintains an open stance on the effectiveness of both targeted support and simplified advice models, aiming to meet consumer needs efficiently and at manageable costs.
The FCA remains committed to refining support structures in the financial advisory sector, ensuring that consumers receive pertinent guidance precisely when they need it.
