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British people with cash savings Their bank accounts will be contacted by finance firms recommending investment options under a new Government-backed support scheme to help people increase their wealth,
Currently, less than one in ten people (9 percent) have access to payable and regulated financial access Advice To suit their circumstances and needs. Millions of others fall into the category of not wanting or not being able to afford financial advice, but can still benefit from such advice.
The targeted support is intended to be a bridge step to the large group of Britons who already have a cash security buffer and who can make more out of their extra money over the long term if they invest it. Cash ISA limit cuts announced The budget is part of the same effort to encourage people to consider investment,
under new schemes banks and other financial institutions, such as the Financial Conduct Authority (FCA), regulated investment platforms or wealth managers, will now be able to contact clients and offer help by showing how they can be better off with certain investment products.
This scheme is still subject to law, but Independent It understands the Government is on track to complete this in time for the new tax year in April.
Sarah Pritchard, deputy chief executive of the FCA, claimed the move would be “game-changing”. “This means millions of people can get additional help to make better financial decisions,” he said. “We also hope this will create greater confidence to invest. While investing won’t be right for everyone, we know that people in the UK invest less than in the EU or the US.”
Some consumer groups have expressed concerns that, because the recommendations will not be personalised, there is a risk that people will be directed towards or choose the wrong options. But the FCA is understood to believe there is a significant risk that people will continue to receive no support or guidance.
Nearly one in ten British adults have no savings, the regulator said. But according to their research, almost seven million UK adults have £10,000 or more in savings.
The data also revealed that a large number of people who were in a financial position to invest did not do so because they were unsure or worried about their options.
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Why does the government want investment from more people?
ministers believe which is developing a better investment culture This will boost long-term wealth and support economic growth across the UK.
In the long run, the returns on investment are better than the interest you get on your money kept in a savings account.
However, this comes with greater volatility – the potential for fluctuations – which means that at some stages the value of your investments may be less than their original value.
This, combined with negative language about investment products and a general lack of early financial education for Britons, has put many people off getting started.
What information can be provided by targeted support?
The companies won’t tell you which shares to buy or give any other details about your specific circumstances.
The idea is that they will be able to explain exactly how to reduce or eliminate risk, how to better allocate or spread cash from a savings account and why whatever they offer can put consumers in a better financial position. They will also have to confirm this to the regulator in advance.
“commission [for providing targeted support] is restricted, we are expecting that most companies that provide it, subject to our regulation, will provide it to consumers free of charge,” Ms Pritchard said.
How do you start investing?
UK-based adults receive a £20,000 ISA allowance each year. One product within the ISA family is the Stocks and Shares ISA, or Investment ISA. Any profits received from investments within one (such as dividends or share price increases) are tax-free, so opening one of these should be the starting point for most people.
Many bank or finance apps offer different versions, as do specific investment platforms, so it’s important to choose one that suits your needs based on fees, usability, or experience. Some offer ready-made portfolios that you can easily choose from depending on how much risk you want to take.
For more information You can read information about starting investment here,
What do industry experts say on the proposals?
“The targeted support will allow millions of people across the country to supercharge their savings and invest with confidence,” said Lucy Rigby Casey MP, Economic Secretary to the Treasury. “This additional support for savers has the potential to be transformative for retail investment in the UK.”
Chira Barua, chief executive of Scottish Widows, called it “an important step in the process of closing the advice gap and financially empowering millions of people”, while Vicki Brownridge, CEO of loan charity StepChange, said “the targeted support creates a structured way for companies to guide people towards the appropriate products and services to meet their financial needs.”
“Millions of people on low incomes now connect with financial services through workplace pensions or savings, but often lack the confidence or support to make good choices,” he said. “In future, we would like to see targeted support taken further to help build the long-term financial resilience of those currently disadvantaged by the market.”
Holly MacKay, founder of the consumer finance website Boring Money, called the targeted support “the most exciting regulatory change in a decade” and said it could transform the country from “an environment of millions of people being almost right to being completely wrong.”