Millions of UK savers could see their retirement income increase by £2,500 annually under new regulations being developed by the Financial Conduct Authority (FCA).
The watchdog is preparing to introduce "targeted support" measures that would enable financial services companies to offer guidance to customers.
Nike Trost, who leads asset management and pensions policy at the regulator , expressed strong confidence during a recent TPR Talks podcast that the reforms would be implemented either before the year ends or in early 2026.
The proposals, which have been under consultation since June with the deadline approaching this Friday, represent a significant shift in how financial institutions can assist customers with investment and pension decisions.
New FCA rules could give pensioners a significant retirement savings boost
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Under existing regulations, individuals holding funds with pension providers and investment companies cannot receive guidance on investment strategies unless they purchase professional financial advice.
The proposed framework would permit financial institutions to offer suggestions tailored to customer groups sharing similar characteristics, helping them navigate investment choices more effectively.
According to the FCA's consultation documents, the service would assist consumers in selecting from "really good product choices to choose from in a really simple way," as Trost explained.
Financial institutions would need regulatory approval from either the FCA or Prudential Regulatory Authority before offering this service, ensuring proper oversight and consumer protection standards are maintained.
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The FCA is the UK's primary financial services watchdog | PA The guidance would include clear explanations about service limitations and investment risks, helping customers distinguish between targeted support and personalised financial advice.
Karen Barrett, the founder of Unbiased, highlighted research demonstrating that professional financial guidance typically enhances retirement income by £2,500 yearly.
She pointed to the substantial opportunity for growth, noting that UK residents currently hold more than £430 billion in savings accounts that could potentially generate better returns through investment.
"Without knowing the final details from the FCA, we are confident that millions of UK households could benefit from access to high-quality financial advice, which they are not getting today," Barrett stated.
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FCA data reveals approximately seven million UK adults possess savings exceeding £10,000 in cash accounts, potentially missing investment growth opportunities throughout their working lives.
The regulator's research indicates that merely nine per cent of British adults sought professional guidance regarding pensions or investments within the past year. Department for Work and Pensions (DWP0 research indicates that 38 per cent of working-age individuals are not saving adequately for their retirement years.
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Liz Kendall has launched a new Pensions Commission | PAThe new measures would specifically target three categories of savers who could benefit from enhanced support.Those currently contributing insufficient ounts towards retirement would receive suggestions for more appropriate contribution levels from their providers.
Individuals facing difficulties accessing their pension funds would gain clearer guidance beyond the basic factual information currently permitted, with firms able to recommend specific investment products.
The reforms would also enable institutions to approach customers holding significant cash reserves in current accounts, suggesting investment alternatives that could deliver superior returns.
Banks would be authorised to alert customers when opportunities exist to transfer funds from low-yield current accounts into potentially higher-performing equity investments.