FCA’s advice reforms: A defining moment for UK fintech and financial services

A pivotal shift in UK financial advice

The UK’s financial advice landscape is on the cusp of its most significant shift in over a decade. The Financial Conduct Authority (FCA) has outlined proposals to introduce a new category of support “targeted support” intended to bridge the gap between basic guidance and full regulated advice.

This move is aimed squarely at the millions of UK consumers who currently fall outside the reach of traditional advice models. The proposed framework would give regulated firms, including banks, pension providers and fintech platforms, the tools to offer timely, cost-effective support to customers earlier in their financial journeys.

Since the introduction of the Retail Distribution Review (RDR) in 2012, the cost and complexity of full financial advice has limited its accessibility. Fewer than one in ten UK adults currently receive regulated advice, leaving many to navigate savings and investment decisions without sufficient support.

The consequences are far-reaching:

• financial inertia;
• suboptimal outcomes;
• and under-utilised capital, particularly for individuals with modest savings or limited confidence in their financial knowledge.

Unlocking innovation through targeted support

The FCA’s new approach seeks to unlock innovation by providing a middle ground. Under the proposals, firms would be able to offer simplified guidance and decision-making tools without triggering the full regulatory requirements associated with personalised advice. This is a critical step toward making financial support more accessible, scalable and responsive to consumer needs.

A particular challenge the FCA hopes to address is the significant volume of UK savings left in low-yield accounts. In the post-pandemic economy, UK households hold an estimated £250 billion in excess cash, much of it eroding in value due to inflation. The demand for trustworthy, practical guidance is clear, yet many consumers hesitate due to a lack of affordable or approachable options.

The evolving role of fintech and established providers

Fintechs are already moving to close this gap. Platforms such as Plum and Moneybox have introduced smart, accessible tools that use behavioural nudges, automated journeys and goal-based savings to guide users from inertia to action. These firms are well placed to evolve under the proposed model, offering scalable support that remains within regulatory boundaries.

Established providers are also adapting. Vanguard, for instance, has rolled out low-cost digital planning services, while Hargreaves Lansdown is actively developing tools that offer “guidance-plus” experiences, helping users make informed choices without the need for full advice. These developments indicate a broader industry appetite for innovation that balances support with compliance.

The opportunity for fintech firms is particularly strong. Under the targeted support model, they could offer contextual prompts, such as encouraging smarter contributions or revisiting fund choices, based on a customer’s age, goals or economic circumstances. As artificial intelligence continues to mature, there is clear potential for firms to deliver compliant, scalable and personalised experiences at pace.

Balancing innovation with responsibility

What sets targeted support apart is its flexibility. It allows firms to engage customers through digital prompts, guided journeys and structured decision trees, providing meaningful help without overwhelming consumers or overstepping regulatory boundaries. It’s a more practical, proportionate approach to addressing the advice gap.

Hybrid models also show promise. Services that combine digital interfaces with access to human support, alongside tools such as dashboards, risk profiling and real-time reporting, could play a key role in improving transparency and user confidence without unnecessary complexity.

However, innovation must be underpinned by robust governance. Any simplified support must still meet the FCA’s Consumer Duty requirements:

• clear, fair, and not misleading communications;
• good customer outcomes;
• and proactive risk mitigation.

Firms using automation or behavioural design must monitor results closely, ensuring that support encourages thoughtful decision-making rather than driving transactional behaviour.

Providers such as Nutmeg, which combines risk-based portfolios with transparent fees and guided experiences, are already demonstrating how compliant digital models can succeed in this space. As the FCA refines its expectations, firms that take a proactive, compliance-led approach will be best placed to lead.

Preparing for the future

Ultimately, this is about more than regulation. It’s a chance to reimagine financial advice in the UK, making it more inclusive, practical and attuned to the needs of today’s consumers. For fintech’s and financial services providers alike, it’s an opportunity to deliver both commercial growth and meaningful impact.

The FCA’s consultation is open until August 2025, with final rules expected by the end of the year and implementation anticipated in April 2026. Now is the time for firms to review their customer journeys, assess their regulatory frameworks and begin shaping propositions that align with this new direction.

If you’d like to discuss the implications of these reforms, or how your organisation can prepare, our team is here to help. Contact us today.