FCA want reforms, so we all understand our finances better
The Financial Conduct Authority want a shake up when it comes to getting advice on finance matters. The FCA say that the majority of people in the UK do not understand their finances and the products they're getting, and need more access to advice.
The watchdog says that they want to see big changes, so that banks and independent financial advisers can better serve the market. If these come good,, this could be one of the biggest shake-ups of the sector we've seen.
According to the FCA's figures, two thirds of financial products bought at retail are done so without any advice, and people with less than £100,000 to invest are doing it without help, winging it when choosing pensions, and the like. One of the reasons for this is the cost of advice, with the watchdog finding that over 85% aren't willing to pay over £200 for online advice.
By the same token, advisers are generally unwilling to advise people with smaller assets, with 69% of those polled saying that they'd turned away people for that very reason in the last year.
Now there's pension freedoms in place, there's obviously a greater need for simple, affordable advice for people in Britain. The report from the FCA also stated that there's a worrying level of financial illiteracy among consumers. A government survey recently showed that A fifth of people in the UK don't understand their bank statement, while a third can't work out their interest on savings.
This is one of the reasons why banks are going to be offering 'robo advisers' in the coming year.
With independent financial advisers charging £150 an hour, on average, you can see where the problems lie if a customer doesn't have loads of cash to play with. Hopefully, the FCA's reforms mean that everyone has the chance to get expert advice on what to do with their savings, and get better deals on investments and pensions.