The FCA has announced new proposals to improve access to financial advice as part of its consumer investment strategy.

The regulator is aiming to create a separate and simplified financial advice regime, making it cheaper and easier for firms to advise consumers about mainstream investments within stocks and shares ISAs.

According to the FCA’s recent Financial Lives Survey, an estimated 4.2 million people in the UK held more than £10,000 in cash and are open to investing some of it.

Executive director of markets at the FCA, Sarah Pritchard, said: “Now more than ever, people across the UK should have access to useful and affordable financial products and services which can improve their quality of life and support the economy. 

“These proposals are part of our work to deliver a consumer investment market where people can readily access support and firms aren’t deterred from providing it.”

While keeping a cash buffer is a sensible way of dealing with unexpected expenses, consumers who hold significant amounts of excess cash may be damaging their financial position, as inflation reduces the value of their savings.

The FCA believes that strong regulation is “essential for maintaining the UK’s high standards and protects consumers”. However, the regulator said it also recognises that adjusting its advice regime could help the advice market support mass-market consumers with simpler needs.

The regulator is consulting on streamlining the customer “fact find” process so that advice is more straightforward for both firms and customers, and limiting the range of investments within the new regime so the advice is easier to deliver and understand.

The FCA will also consult on making the qualification requirements for the new regime more proportionate, so delivering the simplified advice is less costly for firms, and also allowing advice fees to be paid in instalments so customers aren’t burdened by large upfront bills.

Commenting on the regulator’s plans, Hargreaves Lansdown CEO, Chris Hill, said: “We support the FCA’s move to make investing simpler and it’s great that the FCA recognises that today’s all or nothing approach to advice doesn’t suit everyone, especially those with sufficient savings who are started out on their investment journey. The proposal should help narrow down options for those who want to invest, but aren’t sure where to start.

“The proposal only solves a small part of the much bigger advice gap problem and we welcome the fact the FCA committed in September to a much wider holistic review of advice and guidance. For a long time, Hargreaves Lansdown has recognised that the advice boundary is the key barrier to our ability to guide clients towards better outcomes.

“This review is a big opportunity to demonstrate how we can use today’s technology, data and innovation to guide people with their financial choices.”

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