New free financial advice plan aims to help Britons build savings

Many Britons are daunted by the world of investing, but new City rules mean certain banks and financial institutions can offer free extra help with investments and pensions.

Last month marked the launch of “targeted support”, a new regulated service that permits companies to suggest investments and pension products to customers that might provide a better return.

The service aims to bridge a gap between general guidance and information and financial advisers who charge a fee.

Companies – a list likely to include banks, building societies and investment platforms – have to be authorised in advance by the Financial Conduct Authority (FCA). Most advice is expected to be free with commission payments banned.

If, say, you have a largish sum – perhaps several thousand pounds – sitting in a high street bank savings account, you may see a message pop up suggesting that you consider investing some or all of this money, with a link you can click on. It will take you to the investment options offered by the bank. These may include a stocks and shares Isa or a pension plan.

New finance sector rules mean certain banks and financial institutions can offer free extra help with investments and pensions. Photograph: Hollie Adams/Reuters

These suggestions will not take the form of individually tailored financial advice, which is increasingly only an option for the very well-off. However, they will be based on what the companies “would recommend to those in similar circumstances”, so they should be better than totally generic guidance.

The aim of targeted support is to help people make better-informed financial decisions, the FCA says. It estimates there are about 7 million adults in the UK with £10,000 or more in cash savings “who could be missing out on the benefits of investing”.

As well as people who may be in a position to invest some of their cash, customers who are judged not to be saving enough for retirement are likely to be targeted.

The regulator said that many consumers who were in a position to invest but chose not to did so because they were unsure of their options or needed more support. Fewer than one in 10 people obtain regulated financial advice. However, almost one in five investors turn to social media for help making decisions.