The UK’s equivalent to DBFO – ‘targeted support’
As the Government and Treasury resume work on the Delivering Better Financial Outcomes (DBFO) legislation, the UK’s Financial Conduct Authority (FCA) has signalled its own moves equivalent to Australia’s proposed creation of a new category of adviser.
The UK FCA has opened up consultation around a proposed new construct it is calling “targeted support” representing a continuation of consultation dating back to December, 2023, about it could “ensure people have access to the right support to navigate complicated financial decisions”.
Under the proposed approach in the UK, “targeted support will allow firms to offer suggestions to groups of customers with common characteristics”.
“Millions more people could get help navigating their financial lives with support on pensions and investments. For example, a firm could suggest an alternative sustainable withdrawal rate to a consumer drawing down on their pension unsustainably, or it could suggest that a consumer invests their money in an ISA if they are holding excess cash in their account,” the FCA said.
“Targeted support introduces a new set of conduct standards, which, alongside the Consumer Duty, provide consumer protections.
“We want consumers to have access to different types of support to meet a range of needs. These reforms should set the framework for the next 20-30 years, to support consumers now as well as future generations,” the authority said.
“Some consumers will want assurance that a product or suggestion is suitable for their specific individual needs and circumstances. This is where simplified advice can help.
“Simplified advice can complement targeted support where a customer has straightforward needs and provide a stepping stone to more complex or holistic advice. Alongside our proposals for targeted support, we have set out plans to reform the framework for simplified advice,” it said.
“We want to see a thriving and trusted market for full financial advice, simplified advice, targeted support and guidance. This supports our ambition that consumers should have access to the help they need, at a cost they can afford, when they need it,” the FCA review explanation said.
The FCA’s consultation is underpinned by consumer research undertaken last year which confirmed the existence of a substantial investment gap “with those who could be investing, not currently doing so”.
“At the moment, 8 in 10 consumers have a savings account, but just 4 in 10 have a form of investment product,” the research found while noting that “there are significant barriers to investing, including low knowledge”
It also confirmed the existence of an “advice gap” with consumers not always receiving sufficient regulated support, including for their investments
They must have lots of backpackers too.
Funny that, both governments go into regulatory overreach and red tape overload, then for some reason it’s harder to get advice!! And the answer is more tinkering rather than uncomplicating the quagmire of the existing system
Who’d of thought, you get the same result with the same bureaucratic incompetence.
Mind blowing stuff.
Yeh quality morons in both bureaucracies strangle to death with mass Red Tape over kill of Real Advice. rather than fix the Hot Mess / Cut the Gordian Knot of real advisers.
Solutions = Backpacker call centres of product providers flogging FUM.
That’s going to turn out……..SH#T
While the best retirement default will always be a tailored strategy developed with a well qualified and experienced adviser, we simply have to face the global reality that this isnt going to be the case for the vast majority of people.
So, so-called guided pathways, supported and powered not by concact centres but high quality data, algorythms and AI tech stacks, will deliver a far better next best outcome for millions of people, vs. doing nothing, or worse still, being captured by finfluencers and other carpet baggers.
But for APRA regulated funds, this would best be delivered and closely superintended under a new “MyRetirement” licence requirement.
I’m not convinced this is likely to be true.
GIGO is still a massive thing even with the best of algo’s and AI.