We all want to get the most out of our money. Investing in stocks, shares or pensions can offer benefits, but many people find the options overwhelming and lack the support needed to make confident decisions. Personalised financial advice can help, but for many, the cost of accessing such advice is prohibitive.
Closing the advice gap
There is currently an ‘advice gap’ between paid for, personalised advice and free, but often very generic information available to all consumers. The Financial Conduct Authority (FCA) has identified that a consequence of this advice gap is that only 9% of adults received regulated financial advice in the last year. As part of new measures to tackle the issue the FCA has proposed the introduction of a new ‘middle option’ for advice. This new choice, called targeted support, would see firms create investment suggestions for groups of similar consumers. This would mean consumers would get recommendations for ‘people like you’. This would not be as targeted or tailored as personal advice, but would provide more guidance than general information.
Narrowing of the advice gap with more targeted support would benefit consumers, particularly those who may have funds available to invest but who cannot afford fully personalised advice, making them more able to make complex decisions about investments.
Limitations of the proposals
However, while such targeted support may provide consumers with better advice than general information alone, Consumer Scotland has highlighted to the FCA a number of important limitations of the proposals.
Consumers will need to be clear about the differences between the types of advice they can access, so that they can make informed decisions about which level of support and guidance they need.
When creating groups of consumers, firms should not lose sight of the range of potential experiences or vulnerabilities that people face even within those groups. Issues such as poor mental health or low financial literacy can affect how people make decisions and therefore the level of support they need. Even people who think they understand financial markets can be drawn into making high risk decisions if they are also accessing information from less reliable sources, such as social media.
Wider work still required
Adding this new option to support consumer decision making about how they use their money will help more people to make complex decisions. But this is only one part of the solution. Regulators and governments need to do more to improve financial literacy, which will improve consumer knowledge and confidence. Improving consumer confidence in financial products will help to remove some of the barriers to investment. And financial services providers need to ensure that the design of their products work for a wider range of consumers, and that they understand what the experience of using their products is like for people.
What next
We’ve recently responded to an FCA consultation on this issue as part of our work on financial services. We will publish a fuller briefing in early 2026 with more details of our work in this area to ensure the issues that impact on consumers in Scotland are fully considered.