In an effort to bridge the so-called “advice gap” — the inaccessibility of financial advice for lower-value investors — the U.K.’s Financial Conduct Authority (FCA) is introducing new rules that aim to enable industry firms to provide investors with suitable advice that isn’t based on an in-depth understanding of their finances.
The FCA issued a policy statement on Thursday setting out its regime that’s intended to allow industry firms to provide investors with “targeted support” that’s more detailed than generic financial advice, but doesn’t amount to bespoke investment advice either.
Under the proposed new regime — which still requires legislation to be passed — investors would be able to “receive recommendations, but they will not be based on a full, in-depth individual assessment,” the regulator said.
At the same time, “Firms will need to make sure the recommendations are suitable and should only be offered when it puts consumers in a better position,” it added.
These offerings will have to comply with the U.K.’s Consumer Duty, which requires firms to design products that will benefit investors, and to ensure that they’re only offered to clients that are expected to benefit.
“Targeted support will allow firms to provide suggestions designed for groups of consumers with common characteristics to help them make important decisions across their pensions and investments,” the policy noted.
The regulator called the approach a “radical shift” for the retail investment industry.
At the same time, it stressed that while firms will be expected to meet certain standards, ultimately, “consumers will be responsible for making their own decisions.”
The new approach is targeted at mass-market investors, most of whom can’t afford full-scale financial advice. According to the FCA, fewer than 10% of people are obtaining regulated advice — but one in five are relying on social media for information that they use to make financial decisions.
It also reported that regulators estimate that approximately 23 million adults in the U.K. “are currently underserved by the markets for advice and guidance” including approximately seven million that have at least £10,000 in liquid assets.
“Targeted support will be game changing. It means millions of people can get extra help to make better financial decisions,” said Sarah Pritchard, deputy chief executive of the FCA, in a release.
“We also hope it will build greater confidence to invest,” she added. “While investing will not be right for everyone, we know people in the U.K. invest less compared to the EU or U.S. People in the U.K. could be missing out on the potential benefits of investing in the medium to long term.”
The FCA is expecting the new regime to launch on April 6, 2026. In the meantime, it’s helping firms prepare to apply to offer targeted support services once the framework is finalized.
Also on Thursday, the regulator published joint statements with the U.K.’s Financial Ombudsman Service and the Information Commissioner’s Office, spelling out how consumer complaints and redress involving targeted support services will be treated and how existing direct marketing rules will apply to these services.