I have just been reading an FT article with the above title. The FCA is to change the regulations about financial advice so that companies can give “targeted advice” but without getting into the costly need to give personalised advice by doing a full customer review. At least that is what I understand it to mean.
What’s wrong with the system at present? Those who most need such advice as they are financially ignorant tend not to get it because it is too expensive. The feeling is that many people are keeping too much cash in savings accounts rather than investing in stocks or bonds that would give better long-term returns.
Will this be a solution? Perhaps but it is not yet clear (to me at least) how this will work in practice and what exactly is “targeted advice”. The details of how this will work have yet to be disclosed.
I would suggest this is a poor solution to the problem. The better answer is to get folks more educated so they make the right choices when investing or saving. Education of the young in schools and colleges is not good enough so they fail to learn how to manage their own money well and how the financial world works.
Did the FCA actually consult those folks knowledgeable about financial matters rather than just those making money from retail investors? I do not recall any such consultations. This looks like an idea thought up by financial institutions to avoid giving personalised advice and will just be a cheap way around the problems that currently exist. It may protect those who currently provide advice from their responsibility to give appropriate advice but that is not what we need.
Roger Lawson (Twitter: https://x.com/RogerWLawson )
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