When consumers do look for support, those who receive advice as opposed to guidance are more likely to hold investment products.
Additionally, consumers value the confidence a personal recommendation offers.
The regulator is introducing increased flexibility in payment schedules relating to advice costs for consumers.
“Our aim with this is that the price of existing advice provided by humans, rather than robo‑ or auto‑advice, should reduce,” it said.
“This should see a greater number of consumers willing to consider advice and a smaller number put off from receiving advice through perceived high charges.
“Our expectation is therefore that more consumers will move some of their excess cash savings into investments within S&S Isa wrappers.”
Through this, the City watchdog wants fewer consumers to experience a significant reduction in the value of their savings due to inflation, and for more consumers to benefit from greater returns associated with investing over the medium to long term.
The FCA said these proposals are a key part of its consumer investments strategy which sets out its three year plan to address the key harms in the consumer investment market.
‘A watershed moment’
Richard Wilson, chief executive officer at Interactive Investor labelled it “a watershed moment in the UK”.
“It will determine whether we can begin to change the narrative around long-term financial wellbeing,” he said
“Get it right and the financial services industry can find simple solutions that break down barriers to advice and crucially, reduce the advice gap.
“What we need is simple solutions, with clear pathways that don’t make people feel anxious – solutions that are easy enough that people will actually do it.”
Wilson said financial advice currently centres around complex suitability homework which gets in the way of finding simple, affordable solutions.
“This is joined up, right way round thinking from the regulator,” he said. “It’s a big deal.”
Alastair Black, head of industry change at Abrdn, said: “We need to get behind this and ensure it delivers a practical solution making advice more accessible to more people, ultimately helping to shrink the advice gap.
“Advisers want to be able to offer accessible, affordable advice to match clients’ wide range of needs.
"And clients don’t always want, or even require, a full review, which can be costly to both deliver and buy.”
